Subject: FW: November, 2011 Bordereau Newsletter
In This Issue
· i-Pad app for CATEX Bordereau
· Big broker says loss reporting must improve
· Bolt says aggregate tracking is essential for Lloyd’s syndicates
· Piercing the “aggregated data” shell and finding underwriter “gold” within
· Still uncertain about “cloud computing” & “SaaS”? Larry Ellison and Oracle are believers.
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Bordereau System App coming soon for iPad and iPhone
On November 10 CATEX is releasing its own new i-Pad app for its Bordereau/Program Management System. Now i-Pad and i-Phone users will be able to download the Bordereau System application and see real time reporting results for bound and quoted delegated authority business on a per product or per coverholder basis.
If you have been following developments at Lloyd’s this year you know that a number of i-Pads have been distributed to brokers to better enable them to conduct business with underwriters at the boxes in the Underwriting Room. The program has been successful (and why not – i-Pads are great!) and now CATEX Bordereau/Program System reporting data can be accessed via an i-Pad application.
Loss reporting must improve says Broker
BMS Group is a global insurance and reinsurance broker with its headquarters in London. You may have once known them as Ballantyne McKean & Sullivan. Jonathan Morris, managing director of BMS , made several interesting observations in an interview with Intelligent Insurer on page 2 http://content.yudu.com/A1ueot/BBMon/resources/1.htm, at the annual conference or reinsurers and reinsurance buyers in Baden Baden, Germany this week.
Mr. Morris said that he thought that methods of improving post-loss reporting estimates would be an important topic of discussion during the meetings. He said that especially loss reporting creep –where loss estimates gradually grow over time – and post renewal loss advising would be of concern to reinsurers.
He went on to say that “accuracy of loss advice prior to renewal would lead to the profitability of some business” being questioned. Morris believes that the pressure on reinsurers who are losing money will come from clients not collecting on the recent earthquake losses. When you combine that, says Morris, with the willingness of “new, non-loss paying capacity (so called “clean capital”) entering the fray” you have a situation where there will only be a continued struggle to raise rates.
This is probably not very big news to you. After all, losses attract the attention of markets quickly! But what struck us is now we’ve seen the pressure for better loss information at just about every level of the reinsurance and insurance industry. It’s no longer enough for coverholders to outsource their claims business to a TPA and not bother to run those same claims against their insured book to see where their loss experience has spiked. That kind of failing can make your annual contact with your market underwriter quite unpleasant. Wouldn’t it be better to have the information in advance and have a mitigation plan in place?
The CATEX Bordereau/Program Management System can manage this process for you right down to the risk level.
Still a little unsure about “Cloud Computing”?
Yes, that is who you think it is, Larry Ellison, CEO of Oracle. Oracle just placed a big bet on cloud computing last week when they spent $1.43 billion in cash to buy a company called RightNow Technologies. Oracle believes that online software and online data and programs are not in “the future” but are here right now. The acquisition will help Oracle launch its own “cloud” where businesses can store data and access programs.
We agree with Oracle and in fact all of our applications are available only through the Internet. This means that time from license agreement to implementation is a matter of hours not months. See this link http://www.oracle.com/us/corporate/press/519740 for the full press release from Oracle.
Lloyd’s wants better Underwriting data to track
Tom Bolt is the Director of Performance Management at Lloyd’s. In the last issue we talked a bit about his insistence that the Lloyd’s marine energy sector underwriters, who provide cover for huge offshore energy risks (think BP Macondo), be able to track the overall levels of aggregated risks they are exposing themselves to.
The property insurance of a big offshore platform is bad enough –easily a several hundred million dollar PML – but at least it’s quantifiable. The liability part of the coverage is the great unknown. How can anyone without a crystal ball make an educated guess as to the widespread liability impacts of a spill along a coastline? It’s not easy and Bolt knows it.
Bolt says that “given the nature of aggregation, particularly following the circumstances of the Deepwater Horizon, that Lloyd’s syndicates have a demonstrated record of thoughtful underwriting”. Bolt wants to know if “they have the ability to track aggregates and communicate those to me in a way that I can understand the exposure of the central fund, both within a syndicate and across the market”.
Bolt says that if marine energy underwriters can demonstrate that they can track those numbers, and their approved underwriting business plans permit them to offer such capacity, then he has no objection at all to underwriters offering liability cover even within policies packaged with property cover. His whole point seems to be that since he is the keeper of the central fund he needs to see exactly how much exposure underwriters may be incurring. He would then match those levels against their approved underwriting business plans. If they are out of balance you can be sure he knows how to reach them!
Tom Bolt has a good phrase for this kind of civil regulatory response. He says that the Lloyd’s “role is that of a critical friend”. There is an article featuring comments with Tom Bolt from an interview he gave while at the Baden Baden conference last week on page 12 of the Intelligent Insurer at http://content.yudu.com/A1ufif/BBWed/resources/1.htm.
Disaggregated Data vs. Aggregated Data
If you are a regular reader of our newsletters you know that one of our biggest issues is the importance of collecting and managing disaggregated data. In our view there isn’t a great deal of sense in only insisting that aggregated delegated authority data be reported when for the same effort risk specific, disaggregated data can be made available to underwriters and management at coverholders and markets. Really, which of the two data sets above would be more helpful to you –especially if you can easily go from “disaggregated” to “aggregated” when the reverse is impossible.
In this interview, on page 15 of the Intelligent Insurer, http://content.yudu.com/A1ueot/BBMon/resources/1.htm
That’s why Lloyd’s has insisted on faster aggregated data reporting. So, think about it. That means that all of the little granular bits of risk that have been bound via a delegated authority will be more quickly wrapped up and transmitted in an aggregated manner to the market and ultimately made available for review by Lloyd’s. Is that enough? You tell us. What good is an aggregate number in dollars or sterling indicating the insured amount written unless it can be opened up to reveal the exact number, location or type of risk that was bound and, or, which coverholder actually bound it? Isn’t this kind of information really what an underwriter needs?
The CATEX Bordereau/Program Management System can produce both aggregated and disaggregated reporting information. It can also match premiums, claims and endorsements against specific disaggregated risks. For management, or for an underwriter, this view is invaluable. Now, for the first time, one can actually manage specific risks within a torrent of bound delegated authority risks coming on to your books.