Part 3 in a series by Jack C. Randall, CIC, PCLA, PFMM
©2020 Randall Resources Int’l
When it comes to maximizing your mutual’s Reinsurance investment, get 2020 off to a great start! Let’s look at more simple, yet effective SECRETS your mutual can effectively utilize to:
- attract proposals from multiple reinsurers.
- get the best reinsurance rates.
- get the best reinsurance terms.
- be offered the broadest selection of programs and retentions!
In this third issue, let’s look at three more “gold nuggets” you can use during the process of soliciting reinsurance proposals:
1. Start the proposal request process EARLY! OK, hold on! I fully realize it’s still January and that it would be foolish to send your reinsurance proposal requests this early in the year. NO reinsurer has ANY info or rates in place yet for 2021. Relax. Please read this point again carefully. I said, “Start the proposal request process EARLY!”
My point is not to send out the actual proposal requests now, but rather for you to start mapping out your desired proposal request process before the year gets too crazy and time slips away. I’m talking about laying out the steps, actions, and timeline you intend to use in order to get your reinsurance proposals back with plenty of time left for final consideration. IMPORTANT: When I say “timeline”, be sure to include marking your proposal dates and deadlines on your calendar! Good intentions aren’t enough – you need to structure your proposal process to avoid frantically requesting proposal options in December. The later in the year the proposal request is made, the greater the time pressure for reinsurers as well because most mutuals wait too long to send out their proposal requests. Options, terms, and pricing offered under time pressure may well not be optimal. Communications can get strained and confusing.
Take a moment, early on, to outline the proposal process YOU will use by asking questions such as these:
- How many requests should I send out?
- From which reinsurers will I request a proposal?
- What likely information do I need to assemble for them in advance?
- Who from our company should be actively involved in the process?
- When should I send the proposal requests and what should be my proposal response deadline?
Answering questions like these can then help you establish a calendar timeline (checklist) of what needs to be done, and when. This can serve as a helpful guide that works for YOU and reminds you to get your requests out and get them back with time to spare. I recommend you set an October proposal return deadline. That way, you still have “wiggle room” timewise to allow for questions, follow-ups, unexpected delays, and your final decision. Even if 2020 turns out to be a bit hectic, it doesn’t have to be stressful for you when it comes to your reinsurance proposal timeliness.
Position your mutual apart from the crowd of your peers by requesting proposals a bit earlier. This portrays foresight on your part and extends courtesy to the reinsurers involved, while reducing stress and making sure the best options, terms, and pricing don’t get limited by a time crunch!
2. Know what you are looking for and why! When it comes to requesting reinsurance proposals, there can be several motivations. Some mutuals desire a proposal from a specific reinsurer for very specific reasons. Other mutuals want to send multiple proposal requests initially, so they can narrow them down to a final reinsurer choice – most often determined by the best price, program, or terms. Other mutuals may want proposals from a direct reinsurance writer while others prefer utilizing a reinsurance broker.
Carefully plan out to whom you will send your proposal requests and why. Be clear in your mind on what you want in a reinsurer as well as what you want to accomplish through the reinsurance proposal process itself. Remember to do some advance work in investigating what each solicited reinsurer is looking for in a potential, new account. Does their communication, response, and offerings make them a good “fit” for a long-term relationship with your mutual? Are you a good “fit” for them? the “fit factor” has to work both ways to be successful in the long run. How you both interact during the proposal process can be insightful for both parties. Take time and effort to send the right “message” about your mutual – not the wrong one!
3. Decide who you want on the field! I touched on this in my earlier point #1 above, but due to its importance, this nugget really deserves separate emphasis. As part of your proposal “process”, careful advance consideration should be given to selecting only those from your mutual who should be involved in one-on-one discussions with potential reinsurers or brokers. Don’t just assume it’s only the Manager or CEO. It may (or may not) be beneficial to include others like the Treasurer, Underwriter, VP of Accounting, or Board Chair. Don’t involve too many people. Simply waiting until the last minute to see who’s available to talk when the reinsurer stops by should be avoided and could actually send the wrong information or message about your mutual. Strategically select and tap your pre-determined, “key players” who can most effectively and positively help you “advance the ball” of vital information about your mutual.
Don’t be surprised when your efforts result in a wide array of attractive, on-target proposals to choose from!
Stay tuned for next month’s blog where we will explore even more “gold nugget secrets” to attract more reinsurers to your mutual!
All my best to you,
Jack C. Randall, CIC, PCLA, PFMM
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Contact Jack@RandallResourcesInt.com or call 816-617-4823.