How Reinsurers Can Help Group Insurers In Changing Times
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Already challenged by their own needs to manage costs and maximize return on capital, group insurers also confront a changing benefits landscape largely impacted by rising health care costs. These realities in turn prompt changes in a seemingly unrelated areagroup life and accident benefits.
Employers, squeezed by high health care premiums that take a bigger slice of a fixed benefits pie, are calling for more creative and cost-efficient group benefits packages. As a result, insurers are tweaking the pricing and product offerings of their group life and accident coverages. Requests for higher supplemental and voluntary coverage amounts and other expanded benefits are on the rise.
At the same time, insurance companies are exploring ways to fine-tune their own processes, products and pricing as they look to heighten their financial performance to meet rising investor expectations for returns on capital. The bar continues to move higher as analysts often now look beyond whether or not companies are growing profits to also consider how companies stand against their peers in capital returns.
Insurers efforts to achieve internal financial efficiencies while responding creatively to their customers needs has one important impact to reinsurers: increasing demand for consulting services. There are more opportunities for reinsurers that are able to bring market-wide data resources, sophisticated risk-modeling tools, product development know-how and the perspective of their own risk-taking business to their insurance company clients through consulting services.
Insurers turn to reinsurance partners for help on a wide range of issues. Three years after 9/11, many insurers still are working through concentration of risk issues, an arena where few have built solid tools to help analyze and manage ceded risk. Insurance companies also are increasingly looking to fill gaps in their product lines "on the fast track," or particularly, to reconfigure their plan designs to meet the needs of employers. Reinsurers are an important resource for both of these needs.
