Technology - Sharpening up your business intelligence.

(From Reinsurance)

Byline: Paul Latarche, director at Moore Stephens.

Recent years have witnessed a global trend towards a more decentralised business structure for large (re)insurers. In particular, the merger and acquisition trend has led to the bigger insurance groups finding it harder to centrally manage their reinsurance purchasing. This has inevitably led to increased operational and financial risk.

For many, controlling the reinsurance purchasing process is one of the most complicated areas of business monitoring. It has become increasingly difficult to monitor what reinsurance contracts are being purchased, utilised, or what the overall exposure is to any one reinsurer or reinsurer group, by class of business or geographically.

This problem has been compounded in recent times by the increased regulatory requirements, such as rules imposed by the FSA. Now there are strict requirements that any ceding organisation must have immediate and constant knowledge of their reinsurance exposure at a group level. Data availability, quality and transparency have also been highlighted as critical risk factors when attempting to evaluate the amount and location of reinsurance exposure.

These difficulties arise because of the very nature of a group's operations.

Each division or business subsidiary is likely to have almost complete autonomy in its purchasing decisions. Reporting to head office is often inconsistent due to the variety of administration and reporting systems worldwide, and divisions operating in different countries may have to manage different reporting timescales internally.