Accurate Reinsurance Data: Mitigating the Silent Crisis and Enhancing Profit Margins — Insights from Supercede’s Whitepaper

In the dynamic world of reinsurance, the accurate and reliable flow of data is essential for success. However, the consequences of subpar data go far beyond mere inconvenience. It has become increasingly apparent that poor data quality poses a significant financial drain on results. Cedents, who are paying the price for this reality, face escalated reinsurance costs, diminished capacity, and missed opportunities for innovation. This article delves into the repercussions of ambiguous or inconsistent data and highlights the need for enhanced data submission practices to unlock the full potential of the reinsurance market.

The Impact of Subpar Data

Despite its seemingly intangible nature, subpar data wields considerable financial consequences. What was once considered an inconvenience has transformed into a critical issue affecting crucial aspects of reinsurance. Cedents now suffer from increased reinsurance costs, reduced capacity, and limited access to innovation opportunities. The subsequent findings unveil a stark reality: subpar data is not just a nuisance but a financial drain on results.

The Data Distrust Tax

A notable revelation from recent research is the concept of the “data distrust tax.” Reinsurers, when confronted with ambiguous or inconsistent data, are compelled to levy this tax. The implications are wide-ranging, resulting in a concerning surge of up to 10% in reinsurance rates. This increase has a negative impact on both loss and combined ratios, leaving cedents struggling with higher costs and reduced profitability.

Consequences for Cedents with Patchy Data Sets

Cedents delivering fragmented data sets often find themselves sidelined from customized evaluations, further compounding the consequences. Reinsurers prioritize well-structured data submissions, as they provide a competitive advantage in the market. Success lies in the ability to present comprehensive and reliable data that enables underwriters and actuaries to make informed decisions.

The significance of high-quality data cannot be overstated in the reinsurance sector. Providing well-structured data is not only a prerequisite for gaining a competitive advantage but also a means to secure preferential terms in a fiercely competitive market. Tobias Sonndorfer, Management Board Member at VIG Re, concurs, stating that well-structured data offers a definitive edge in the industry.

The Impact on Underwriters and Actuaries

In a world inundated with submissions, underwriters and actuaries are tasked with processing a vast amount of information. Inevitably, they prioritize clear and well-structured data submissions. Consequently, submissions lacking clarity are often left for last, leading to potential delays and missed opportunities for cedents.

Current Shortcomings in Data Submission Practices

The research findings highlight a disconcerting reality: current data submission practices are falling short of high-quality data standards. Ben Rose, President of Supercede, emphasizes the importance of addressing these shortcomings and asserts that high-quality data is essential for a well-functioning reinsurance market.

Motivating Positive Change

Shining a light on the issue of subpar data and its consequences is a catalyst for positive change. By raising awareness and creating a sense of urgency, the industry can collectively strive for improved data submission practices. Positive change not only benefits cedents but also enhances the overall efficiency and profitability of the reinsurance market.

Harnessing Emerging Tech Innovations

Enhancing data submission standards is not only about avoiding punitive pricing, but also about harnessing the potential of emerging tech innovations. By embracing high-quality data, cedents can unlock the promises offered by technologies like artificial intelligence, machine learning, and predictive analytics, further strengthening their competitive position in the market.

In the ever-evolving reinsurance landscape, the importance of high-quality data cannot be overstated. Subpar data not only incurs financial costs but also stifles innovation and limits growth potential. By championing the cause of enhanced data submission standards and embracing positive change, the industry can navigate the challenges ahead, secure preferential terms, and drive the reinsurance market forward. It is time to recognize the hidden cost of subpar data and take proactive measures to unlock the full potential of reinsurance through high-quality submissions.

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