In a previous article (When to Automate) I suggested eight considerations when one is deciding whether to automate a complicated process to improve both efficiency and accuracy. In this article I will summarize a real-life project where we used automation to achieve those goals. My hope is that you can identify processes in your own company that could similarly benefit from automation.
One of Ruark Consulting’s businesses is the administration of reinsurance treaties between insurance companies. This involves receiving very large tables of data from one company, performing extensive calculations, and creating large tables of data to be sent to the other party. The steps involved in this process are indicative of the issues to be dealt with in any automation process.
The Executive Summary of Ruark Consulting’s 2010 variable annuity experience studies is now available. Highlights are presented for the 2010 Variable Annuity Surrender Study and the 2010 Variable Annuity Benefit Utilization Study.
Executive Summary 2010 Variable Annuity Surrender Study and 2010 Variable Annuity Benefit Utilization Study
Reinsurance programs in the annuity and life insurance market are common and are intended to provide value to both the Ceding Company and the Reinsurer. The negotiation and placement of reinsurance programs receive significant and high level staff commitments. Thereafter, ongoing administration will affect the coverage and value of the reinsurance program. There are common administrative pitfalls that will impact the value of a reinsurance program if not tended to with proper care. Ruark Consulting has the experience and capabilities to avoid these administrative pitfalls.
Superior reinsurance administration should address the following:
Insurance companies have always performed experience studies, but the needs for these studies have increased dramatically and will continue to do so. Product designs have become more complicated. Principle based reserves and required capital require significant knowledge of historical experience in order to establish appropriate assumptions.
Experience studies must satisfy the following criteria to be of maximum value:
- Reliable data
- Sufficient volume of data
- Retain value of business information
- Detailed breakdowns to see trends
- Analysis and understanding
- Availability of internal staff
- Timeliness
Fixed annuity and indexed annuity reinsurance is a market where Ruark Insurance Advisors has significant experience, along with variable annuities and life insurance. This article reviews the basic parameters that a direct writer should understand in order to evaluate the applicability of fixed and indexed annuity reinsurance to their situation.
Annuity reinsurance is a tool to manage required capital, surplus strain and a company’s balance between asset risks and insurance risks. Limiting sales volumes can achieve similar results but may conflict with strategic needs to maintain or grow sales volumes and to enhance relationships with distributors.
We’ve all been there: we start out with a simple Excel or Access routine and before long it morphs into a complicated process involving many calculations from many data sources, and possibly involving many people in many physical locations. If you’re anything like me, you’ve had these thoughts come up:
- I wish I could hand this process off to someone else, but the steps involved are too complicated to explain.
- My team is spending way too much time on these routine procedures. I wish they could spend more of their time applying their expertise to their current work and to other projects that need to be addressed.
Ruark Insurance Advisors has the capability to help our clients structure, price and place life reinsurance Aggregate Stop Loss programs. We use our stochastic mortality model to evaluate the mortality fluctuation risk of your business. From this analysis, the Attachment Point and Claim Limit can be chosen to provide the risk coverage desired, at the price acceptable to the Ceding Company. Ruark Insurance Advisors then places the reinsurance program with reinsurers acceptable to the Ceding Company. A more detailed description of these programs can be found at:
Life Reinsurance Aggregate Stop Loss Programs
Rich Tucker and Tim Paris’ article entitled “State of the Variable Annuity Reinsurance Market” has been reproduced in the January 2011 newsletter of the Society of Actuaries Reinsurance Section. The newsletter can be found at:
Reinsurance News January 2011
Tim Paris will be a presenter at the SOA Investment Symposium on April 11-12, 2011 in New York City, as part of the session “Variable Annuities – 24 Months Later”. Tim will be addressing the topic of variable annuity policyholder behavior during the financial crisis.
Tim will also be a presenter at the Insights into the Pricing of Policyholder-Related Assumptions Seminar on May 18, 2011 in New Orleans, where he will also be addressing variable annuity policyholder behavior.
The Society of Actuaries has released the 2010 VA Policyholder Behavior in the Tail survey results for VA guaranteed benefits. This survey is conducted annually by the Joint Risk Management Section to assist the industry in developing better estimates of policyholder behavior in the tail. Rich Tucker is a member of this Working Group. The report can be found at:
2010 VA Policyholder Behavior in the Tail Survey Results
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