New Reinsurer? Some Tips For A Smoother Transition
With so many companies changing names lately, you have to look at your letterhead just to make sure you know whom youre working for today. Swiss Re bought Lincoln Re, Life Re, Cigna Life Reinsurance and other companies in the U.S. and in Europe, while ING has been busy buying other companies as well. These mergers and acquisitions bring financial opportunities for each company and new challenges for others.
Life insurance companies that were used to doing business with the same reinsurer for a long time–where good working relationships had been established, where they could each interpret their own "shorthand" in their communications, and where a set of unwritten "rules" for submitting facultative cases had been in place–may have to struggle a bit to get in step with the new reinsurers business style.
Some of you may be thinking, "Oh, but we deal with more than one reinsurance company. If we start having trouble with one, we'll go to the next…"
Uh-huh, just wait.
It's only a matter of time before one or more of your reinsurers becomes a new member of the "Mega-Reinsurer" family of companies and it will be necessary for many insurers (except those who are "self-reinsured") to prepare to do business with "the new kid in the block."
At some reinsurance companies, the acquisition may have been transparent if there were few or no major changes made by the buying company. However, if as part of these changes, department heads and other key employees were replaced, and the old reinsurance manual (which everyone knew how to use) was trashed to make way for a new one (that is unfamiliar even to the underwriters at the reinsurance company) you had better keep some aspirin on your desk. You're in for a few headaches.
If your reinsurer now uses a different reinsurance manual you'll probably find out after:
–Theyve rated that "business sensitive" case so high you cant pronounce the letter or number: Tabletablewhat?
–The same client had been approved "Preferred" by them before the "buyout."
–Youve told the broker "so far, this case looks Standard."
–Youve complained at length to that new underwriter on his decision and you demand to talk to his Chief and he replies, "You're talking to him."
OK, the above has been exaggerated a bit for effect, but it's still true. Something similar happened to me.
One of our reinsurers who is now under new management approved our "business sensitive" large case with a rating that seemed a bit extreme. Meanwhile, I'm trying to calm down the agent, the marketing director and the new business staff, who are all calling me or following me to the water fountain asking about "the case."
I questioned the decision because it wasnt consistent with similar cases we had referred to them before.
After the usual "please hold" I heard some people whispering in the background, like a soccer team before a crucial play.
I found out they had started to use a different reinsurance manual–the one from the parent company–which was a bit more "conservative" in some areas, and that they where just learning to use it themselves.
OK, so maybe someone applied a rate straight from "the book." Thats understandable, but detrimental to our company.
It took a few calls, and a bit of faxing back and forth but the rate was reduced to a more "marketing friendly" one. I did asked them to send us their new manual.
Chief underwriters who encounter similar scenarios are going to need hands-free headsets to manage all the calls from the field:
–"Table 8? I will lose this client."
