Treaty reinsurance is the first stop for many reinsurance buyers, be it their first time in the market or a renewal. Because it may be your first place to shop, we think it is important to take a fresh look at your overall insurance portfolio and business objectives. We can then recommend what types of reinsurance - treaty as well as program and facultative - work best for you. Whatever type or structure of treaty reinsurance solution you choose, at American Indemnity you get our industry-leading underwriting expertise, actuarial and claim service, and financial strength. Your first stop might just be your only stop.
Why Treaty Reinsurance?
The broad protection provided by reinsurance treaties is attractive to many insurers. They usually cover one or several lines of business, or an entire portfolio of risks. From a coverage standpoint, treaties offer several benefits, including protection from large losses, smoother results and additional capacity. They also contribute to a relationship with additional benefits. The regular flow of business fosters an ongoing dialogue on risks, rates, claims and other important aspects of an insurer's portfolio. We value this dialogue, because it encourages an exchange of knowledge, ideas and perspectives - of which we have gained many over our years in business.
Our Treaty Products
We offer treaty reinsurance protection on many lines of business, including:
- Professional Liability
- Health Care
We also provide several types of treaties designed to meet different risk transfer needs. Our Excess of Loss treaties provide relief from loss severity by applying above a certain amount retained by the company. When loss frequency is more of a concern, our Proportional treaties indemnify the company for an agreed proportion or share of its losses. For an accumulation of losses from a hurricane, earthquake or other natural peril, Catastrophe reinsurance covers the aggregate losses above an amount retained by the company. Each product serves several purposes, and the choice of one or several forms will depend on your business and risk transfer goals.
Structuring Your Treaty Protection
Before we decide upon a treaty structure, our first step is to understand your insurance operations and portfolio. All of our treaties are structured and priced individually for each client. Moreover, each treaty is adjusted over time to change as your needs change, and as the business changes. What factors might affect how your treaty protection is structured? We look very closely at these four critical aspects of your business:
- Rating Approach
- Underwriting Strategy
- Claim Operations
- Business Planning and Management
We believe that reinsurance rating and primary/excess insurance rating should complement each other. Company rating approaches range from those companies setting their own independently filed rates to those companies following industry advisory loss cost levels. In all cases we seek to understand your rating approach to make sure that we are "in line" with your rating levels. It is easy for treaty pricing to get out-of-sync with primary pricing. When that happens, net results can change quickly and bad business decisions can be made. We strive to understand and stay current with your overall rating approach as well as your rates and rating factors.
Usually senior management establishes overall underwriting policy and the underwriting department develops specific guidelines and policy forms to implement that policy. With broad strategy and specific directives aligned, they execute the risk selection and risk pricing process. We try to understand all of the underwriting elements before designing and pricing a treaty. Your risk appetite is unique and crucial to any reinsurance protection. Some companies choose to target lower profile risks, while others take on tougher-than-average risks for the right premium. We like to know where you lie on this risk targeting and selection spectrum in order to help determine your expected frequency and severity of loss. Then we can structure the reinsurance treaty for the degree of severity and/or frequency protection best suited to your needs.
How you run your claim department plays a large part in the frequency and severity of claims, and hence the design of a reinsurance treaty. Claim settlement strategy, department structure and everyday procedures can influence results. Our team of experienced claims professionals will often meet with your own claims staff to learn about your operations, philosophy and claim history. The feedback our underwriters receive from this visit helps them evaluate the historical claims experience, and this can assist in pricing. This is a particularly valuable and essential exercise if a company has changed its claims operations and expects those changes to improve loss frequency and/or severity. Also, certain claim management strategies, while they may not affect the ultimate claim outcomes, can impact the size-of-loss distribution of those claims. That fact is critically important to the design of an optimal excess-of-loss treaty. By having a good understanding of all of these claim factors, we can offer the most responsive treaty terms for your company.
Business Planning and Management
Since treaties are usually priced just once a year, treaty structure and rates are designed in anticipation of the expected business to be written. We like to meet with your company management on a regular basis to be certain that the treaty remains appropriate for your company. We might discuss a number of factors important to tying reinsurance to company business plans and needs. How closely a company monitors results on its portfolio of insurance is a critical factor. Reinsurers are necessarily removed from a company's everyday underwriting decisions and claim reports, so they place a great deal of reliance on company management and how closely it tracks results. At times, slight changes in rates, underwriting guidelines, or even underwriting practices can lead to incremental but substantial leveraged effects for the reinsurer; over a longer period of time, such changes can cause dislocations in results between the company and the reinsurer. By knowing how you manage your insurance operations and monitor performance, we can better evaluate your business plan and the suitability of your treaty terms to that plan.
Why American Indemnity?
Our first and foremost commitment to you is to deliver on the reinsurance promises in our treaties. While this is basic to us, it should not be taken for granted in the international reinsurance industry. A wave of reinsurer insolvencies and market withdrawals in the 1980s triggered huge uncollectibles, and more recent reinsurance industry contraction may set off another wave.
You get far more than a strong financial reinsurer in American Indemnity. You also get a knowledge partner in all the "people behind the promise." These American Indemnity professionals deliver their expertise every day through:
- A global network of industry professionals accessed through your account representative
- Prompt claim payments
- Expertise on claim disposition and reserving
- Underwriting and claim input on emerging trends and exposures
- Pricing support on existing and new lines of business
- Product and market development ideas
- Capital and asset management expertise sources
- Expanding on-line capabilities, including contract wording and claims reporting
We hope that American Indemnity is your first stop for treaty protection, but we know it may not be. Either way we make it our priority to learn about your business and find the right reinsurance solution for you. Then, when we recommend a type or structure of treaty reinsurance, or any of our other reinsurance products, you can make the best decision. We would like to become the first stop, and always the last stop, for your reinsurance needs.