Insurers in Australia and New Zealand may be driving up the cost of their own ceded reinsurance with use of outdated spreadsheets, legacy systems and manual processes, Duck Creek Technologies says. 

Using these risky methods to manage reinsurance programs may lead to higher reinsurance costs and potentially expose insurers to other “significant consequences,” Duck Creek Reinsurance MD Julien Victor says. 

Continued use of “antiquated methods may be the biggest factor undermining insurer reinsurance capabilities,” he says, and this can harm business operations, risk positions and bottom lines. 

“Every insight, innovation, influence and advantage is needed to help insurers take ownership of their reinsurance program,” he said. “A strong reinsurance function is vital to delivering better customer outcomes.” 

Reinsurance departments are behind the tech transformation curve, using outdated and riskier methods to manage their contracts and commitments, Mr Victor said. 

Without modern reinsurance solutions in place, insurers are at a disadvantage when negotiating their reinsurance contracts as outdated methods likely contribute to higher leakage, and limit access to data and insights, more competitive reinsurance markets and use of more complex yet competitive contract structures. 

“Insurers shouldn’t be contributing further to an already challenging environment by relying on antiquated reinsurance management methods,” he said. 

"These may negatively impact an insurer’s agility ... and place dependence on human manual input and leave an insurer highly vulnerable to the increasing complexities of modern and global contract structures, cyber security threats, changing regulations and more stringent compliance requirements.” 

Duck Creek says antiquated systems also increase the burden placed on staff because of their unreliability and lack of useability, increasing the chances of employee dissatisfaction and burnout.