It used to be that reinsurance portfolio roll-ups-combining the estimated probabilistic CAT losses from all the reinsurance contracts you write into one global portfolio displaying your business’s overall expected loss and exceedance probability curve-were done annually because of the time and resources needed. But this traditional rolling up for the once-a-year snapshot of a business appears to be waning. At AIR Envision Europe 2017, we polled the room and found that only 4% of attendees are still rolling up on a yearly basis-65% are rolling up their global portfolios on a quarterly basis, and the remainder are rolling up even more often than that!
This raises the question, why are 31% of AIR clients now taking the trouble to roll up so frequently? In this post, let’s explore several of the reasons many executives are opting to shift their reinsurance companies to roll up not only more frequently, but in real time.
1) More Agility in Decision-Making
As an underwriter, you may be faced with a lot of deals to review at any given time-especially during renewals. One of the advantages of real-time analytics is having the ability to respond faster to your broker than your competitors and pick up the best deals before they can. Real-time analytics isn’t just about responding quickly, though-it’s about responding quickly because you are confident in your ability to assume a given risk, i.e., you know exactly what the marginal impact will be, you know aggregate limits are being adhered to, and you know what remains in your Solvency II reserves. Sometimes, the best decision for a given deal is to pass, and so real-time marginal metrics on top of an up-to-date rolled-up portfolio can help you get to “no” faster, enabling you to move more quickly through evaluating all the deals hitting your desk.