Negotiating a reinsurance contract with the most effective protection, and at ideal terms, is top of mind at this time of year for many insurers. At the NAMIC convention in San Diego, we had the privilege of sharing a reinsurer’s perspective on what constitutes best practice for negotiating for ideal protection and terms, and specifically what critical data insurers should include in their reinsurance submission.

In our experience, the most fruitful reinsurance discussions consist of qualitative insights as well as quantitative data. It’s important to really understand a client’s priorities and their perceived value propositions: where do you fit in your market and what differentiates you from your peers? It’s also helpful for us to know our clients’ short-term plans (next 12 months) as well as their multi-year objectives.

In that context, we understand that insurers usually have competing priorities and so ranking your “to‑do” list is incredibly helpful as you think about appropriate reinsurance protection going forward.

Recently, we had a couple of clients develop comprehensive action plans as they began the process of rehabilitating underperforming portfolios. They outlined their initiatives, giving the timeline and the overall impact those actions would have on their portfolios. Such a breakdown is incredibly helpful, from both a casualty and a property underwriting perspective, as we examine how we incorporate those efforts into our analysis of the different treaties.

In Property classes we want to understand your observations and predictions on rate level for the different lines you write. Inflation is a risk factor we examine, as well as the projected impact of tariffs, and what protective actions are in place, either through policy provisions or underwriting procedures. Inflationary pressures and the ongoing practice of updating property values have driven the need for additional capacity in certain cases. It’s important to clarify how much of this demand stems from those dynamics, rather than from writing new business or a shift in appetite toward larger risks. Secondary perils have moved up the property agenda in recent years, and we would look for our client’s underwriting standards for roofs as well as strategies for managing accumulations, for example.

Within Casualty classes of business, legal system abuse is a large, and growing, issue and we want to understand your strategies for dealing with it. How does the litigation environment differ across the venues where you are active? Have you changed your approach in any of your territories due to the litigation trends you observe? Distribution is an underappreciated potential source of problems and it’s worth examining the level of authority your agents have and what comes to the home office for review.

In today’s volatile environment, loss experience can change frequently. Submissions prepared in late summer may no longer reflect current realities. To foster strong, long-term partnerships, cedants should proactively share updates with reinsurance markets. Transparent communication helps ensure stability in market participation and pricing.

As background to these discussions, it is instructive to hear from a client’s wider team, beyond the insurer’s reinsurance buyer. Feedback from senior management and marketing managers as well as actuarial, claims and underwriting is invaluable.

Reinsurers Need Strong Data Submissions

Clearly, our preference is to receive comprehensive information from a variety of sources, with an emphasis on hard data. For reinsurance underwriters, the objective is to synthesize all elements of a submission into a cohesive picture.

It’s about telling the story of how the company performed over the past year – and what the outlook is for the year ahead. Similarly, the interaction of actuarial and claim trends will help us to forecast how a proposed treaty will perform. We use retrospective quantitative data, overlaid with forward-looking qualitative information, to design a reinsurance treaty structure with the appropriate loss cost, premium, terms and conditions.

It’s worth noting that reinsurers want to have confidence in data: do exhibits tick and tie? Is there cohesion between narrative and data? In your premium projections, can you separate growth between exposure and rate? It’s safe to say that before quoting, we want to have a good understanding of key assumptions in projections, pro-forma analyses, and exhibits involving trending.

Our next step is to pressure test the resulting quote. This could mean doing sensitivity analysis of your loss ratios and the time horizons around which we evaluate your experience. Crucially, we want to make sure that the proposed reinsurance structure is aligned with your company's goals. If you have a treaty that's intended for earnings protection or balance sheet protection, the structure must be constructed in a way that meets those expectations.

Components of Your Quote

These are quantitative elements, but we value your qualitative input about them.

Why Transparent Exchange Matters

In today’s increasingly complex and dynamic risk environment there are many different factors to consider when designing a reinsurance program, whether it’s legal system abuse in the Casualty book, or severe convective storms on the Property side, for example. Putting all these pieces together to give us the most robust view of your company will result in a better financial outcome and stronger security for you.

The more complete that view can be, the fewer assumptions we need to make to give you a better solution.

So, full engagement and transparency are critical; ultimately, the more interactions that we have with the right people at the right time will yield the most comprehensive view of your book – and the best outcomes for your business.