(7-minute Listen)
Part 5 in a series by Jack C. Randall, CIC, PCLA, PFMM Emeritus ©2020 Randall Resources Int’l
When it comes to maximizing your mutual’s Reinsurance investment, let’s look at 3 more effective and powerful Gold Nugget Secrets your mutual can 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 segment, we’ll examine some “gold nuggets” that will specifically showcase your mutual’s HONESTY, OPENNESS, and ACCURACY – to benefit your mutual AND pique the interest of reinsurers.
1. Be prepared to “pitch” your mutual using FACTS!
Remember, whenever your mutual has entered into any conversations with a prospective or current reinsurer, each side is essentially “selling” the exceptional qualities of their company and how they can benefit the other going forward. The key on your part is to be confident, sincere, and absolutely factual. So, how can you be positive and proud about your company’s progress while not coming off as “cocky” or stretching the truth?
HOW?
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- Prepare adequately in advance. Determine what to say and how it might be best said. Preparation is the best way to be confident in your delivery.
- Prepare by knowing the main, specific points you want to cover. Work up a prioritized list and just cover your top 3-5 points. If your list is longer, give them written copy of your bullet-point list and they can check out the other points at their convenience. Don’t make the mistake of endlessly droning on as that can come off as contrived or bragging.
- Prepare factual data/stats to back up each of your claims. Don’t just wing it. Prove it. Be able to show progress data over a 5-year, or better yet, a 10-year period. If requested, don’t hesitate to provide them with a copy.
- Prepare to respond to concerns about negative numbers/trends. While you may not necessarily want to waive a red flag about any concerning stats, you definitely want to be prepared with a response should they ask any questions specifically about them. A stumbling response can create potential questions in their minds. Conversely, a confident response about what you are already doing to address the issue can (and likely will) aleve any concerns they may have had.
2. Ask Reinsurers for their honest input and feedback on your mutual!
Whether you are talking with your current reinsurer or having serious conversations with a prospective reinsurer, make the most of these wonderful opportunities to glean from their broad wisdom and expertise. Ask for their specific suggestions, input, and feedback on your company’s operation. What qualities or practices appeal to them? What concerns do they have and what corrective actions would they recommend? Then, carefully document their input and plant these “seeds” into your strategic planning.
Face it. Reinsurers are naturally drawn to mutuals who are responsive and results oriented. There is no better feeling for you (and no better way of thanking them) than being able to see that reinsurer again down the road and reflect on the success your company has had since you began implementing their suggestions!
3. Verify the Reinsurer’s basis for your reinsurance premiums and attachment point!
Whether you are renewing with your current reinsurer or looking for a proposal from another, this single tip can potentially save you boatloads of time, money, disappointment, and headaches. It’s simply this – to avoid errors, verify what specific data the reinsurer needs from your mutual to correctly calculate your reinsurance premium and reinsurance attachment point. Not all reinsurers use the same criteria to calculate these!
For example:
Doesn’t “premium” mean premium? …”losses” mean losses? …“risk” mean risk? The answer is “No, they may not mean the same thing!”
When “premiums” are requested, verify if they want written or earned premiums. Do they want billed or collected? Gross or net? If net, net of what?: refunds, facultative, policy fees, E.Q, etc.?
When “losses” are requested, verify if they want paid or incurred losses. Do they want losses separated by certain perils? Include or exclude cat losses? Gross or net? If net, net of what?: per risk losses, facultative losses, cat losses, reinsurance recoveries, salvage/subrogation, adjusting costs, etc.?
When “risk-in-force” is requested, verify if they want gross or net risk-in-force. If net, net of what? On Homeowners, do they want all coverages A, B, C, D or just A & C? What about facultative risks where reinsurance is purchased specifically?
The important point here is that accuracy in reporting is what they NEED. Don’t just assume. Don’t just use the info you gave the last reinsurer. And don’t just use the data your computer spits out automatically!
Note: If this conversation is with your current reinsurer and inaccurate info has been used in the past – it could affect your premiums and attachment points up or down as corrections are made. In either case, use of accurate data is imperative for both you and your reinsurance partner. Avoid surprises. Your proactive honesty, accuracy, and attention to detail speaks volumes about you and your operation. These are qualities reinsurers are looking for!
Stay tuned for next month’s insights where we will explore even more “gold nuggets” to attract more reinsurers to your mutual!
All my best to you,
Jack C. Randall, CIC, PCLA, PFMM Emeritus
If I can assist your mutual in any way, by answering questions or helping you design an actionable strategic plan and vision to move your mutual forward, please give me a call at (816) 617-4823.