(7-minute Listen)
Part 7 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 another TWO 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, let’s examine two “gold nugget, 50,000-foot perspective tools” that can specifically allow your mutual to quickly identify and convey important changes and trends in order to benefit your mutual AND pique the interest of reinsurers. And, best of all, these tools are easy to create, set up, and update!
1. Create a high-level TIMELINE of your underwriting and rate changes over time.
Reinsurers are always impressed by companies who can swiftly and confidently articulate and produce a condensed listing of changes made to their underwriting practices and rates through the years. This can be accomplished by creating a concise, high-level timeline identifying these changes.
Not only does having such an informative “timeline tool” impress reinsurers, the benefit of having this ready-info at your fingertips can provide invaluable insights to your management staff and board as well. The perspectives and info provided by this timeline can remind and encourage each one of your mutual’s steady progress – or conversely, identify any missed opportunities and gaps where more frequent action could/should have been taken. If the latter is the case, the info provided by your timeline can allow you to make needed adjustments toward getting back on track and achieving the outcomes your company truly desires.
How to Set Up? Creating a high-level timeline of your underwriting and rate changes over time is super easy to set up and super simple to keep updated!
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- Set up a Word document. Going down the left-hand side of the page, identify the various years you wish to denote. (I suggest 10 years of data). Start with the oldest year at the top.
- Look up and populate your document based on past board meeting minutes. Next to the corresponding year, notate the underwriting and rate changes taken as was reflected in your board minutes. Keep your notations condensed and to the point. Remember, for each year indicated, document the effective date of the change, the line(s) affected, a very brief description of the change, along with revenue effect via the increase. (Example: 2011 – Effective March 15th: 5% rate increase on entire Homeowners book. Resulting overall change impact: $260,000 in additional annual premium.) The key here is to end by summarizing the resulting overall change impact in terms of $. (Reference to only rate % changes are more obscure and thus, less meaningful.)
- Once you have this document populated, simply add years and other changes as they occur! As you make more changes in the future, simply add that info to keep accumulating more and more data.
2. Chronicle your book of business by deductible through the years.
Just like the underwriting and rate changes timeline tool we discussed above, reinsurers also want to see how your mutual’s offering and application of deductibles has changed and morphed over time. Information on your use of deductibles and how they are applied to your mutual’s overall book can also be particularly valuable for your management staff and board, because sometimes you can be so “close to the action” for the info to really be noticed. These are just a couple of reasons why the info from this high-level timeline can be so useful!
How to Set Up?
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- Set up an Excel spreadsheet. Going down the left-hand side of the page, list all the deductible options your mutual has offered through the years and up through the present year. (Use one row for each). Across the top of the sheet (left to right), identify each year; Use one column for each. (I would suggest you show ten years). In the cell showing the year also insert the words “% of total book.”
- Populate the spreadsheet based off your computer’s database as of each year end. Populate the cells based on the % for each deductible offered for a particular year as compared to the total book for that particular year. Make sure that all percentages for the deductibles shown add up to 100% at the bottom of each column for each year. Leave the cells blank for deductible options not used or not applicable.
- To maintain going forward, add a year/drop a year. As each year passes, add the most recent year’s data and simply drop off the oldest year to maintain a ten-year snapshot.
If set up and populated properly, readers can easily see what deductible was most commonly used AND what percent of the total book was covered by a specific deductible for a specific year. You may be shocked to see the insights gained from this simple spreadsheet tool!
To summarize, reinsurers look for mutuals who are able to identify and concisely convey important changes and trends occurring within their company. This can be easily accomplished if you:
- Create a high-level timeline of your underwriting and rate changes over time
- Chronicle your book of business by deductible through the years
If you have any questions on either of these tools, or if I can assist you in another area, please contact me. I am willing and able to help you!
Stay tuned for next month’s insights where we will explore even more “gold nugget” insights to improve your mutual’s operation and attract more reinsurers to your mutual!
All my best to you,
Jack C. Randall, CIC, PCLA, PFMM Emeritus
If I can help you design an actionable strategic plan and vision to move your mutual forward, give me a call at (816) 617-4823.