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August 10, 2022

Cedent Audits Have Never Been More Important!

AM Best released their Special Report: P/C Snapshot: Insurers Navigate Pandemic and Elevated Secondary Perils on June 13th, 2022 and noted that in 2021 the US P&C market experienced a net incurred loss increase of 12%. Loss severity in the private passenger and commercial auto segments continued its upward trend, with personal auto writers suffering their second-worst underwriting results in five years. 

With headlines like that, reinsurers may be asking themselves if it is time to perform an audit at their cedents. Rising loss severity for their clients is only one of many market pressures adding new levels of complexity to an already complex reinsurance market. Reinsurers now more than ever can gain insights into their business through their cedent audit process. With these market developments, reinsurers should consider these questions:

  • How are my clients managing claims severity? 
  • Are my clients getting their reinsurers involved early enough? 
  • How do loss trends look at my clients vs the market?
  • Is the data being reported complete and accurate?

These questions can be answered with a thorough and data-driven audit at your cedening insurers. 

And the answers not only drive understanding of compliance with your agreements but can provide insights into underwriting decisions at renewal time. 

To ensure reinsurers are getting the most out of their cedent audits, also consider:

  • Utilizing data-analytics to perform full population reviews 
  • Performing on-going monitoring of client premium and claim trends

Resources are constrained now more than ever and it is important to ensure you are deploying staff appropriately. Johnson Lambert’s cedent audit process is tailored to your reinsurance business to optimize resources, align with your organizational objectives, and address strategic, financial, operational, and compliance risks. You will have better validation of your contract performance while allowing your underwriting and claims teams to focus on their highest and best use initiatives. 

Contact Johnson Lambert to understand how our insurance expertise and data driven cedent audits can help gain insights into your business. 

Zack Wisniewski

Zack Wisniewski

Principal

Cedent Audits Have Never Been More Important!

AM Best released their Special Report: P/C Snapshot: Insurers Navigate Pandemic and Elevated Secondary Perils on June 13th, 2022 and noted that in 2021 the US P&C market experienced a net incurred loss increase of 12%. Loss severity in the private passenger and commercial auto segments continued its upward trend, with personal auto writers suffering their second-worst underwriting results in five years. 

With headlines like that, reinsurers may be asking themselves if it is time to perform an audit at their cedents. Rising loss severity for their clients is only one of many market pressures adding new levels of complexity to an already complex reinsurance market. Reinsurers now more than ever can gain insights into their business through their cedent audit process. With these market developments, reinsurers should consider these questions:

  • How are my clients managing claims severity? 
  • Are my clients getting their reinsurers involved early enough? 
  • How do loss trends look at my clients vs the market?
  • Is the data being reported complete and accurate?

These questions can be answered with a thorough and data-driven audit at your cedening insurers. 

And the answers not only drive understanding of compliance with your agreements but can provide insights into underwriting decisions at renewal time. 

To ensure reinsurers are getting the most out of their cedent audits, also consider:

  • Utilizing data-analytics to perform full population reviews 
  • Performing on-going monitoring of client premium and claim trends

Resources are constrained now more than ever and it is important to ensure you are deploying staff appropriately. Johnson Lambert’s cedent audit process is tailored to your reinsurance business to optimize resources, align with your organizational objectives, and address strategic, financial, operational, and compliance risks. You will have better validation of your contract performance while allowing your underwriting and claims teams to focus on their highest and best use initiatives. 

Contact Johnson Lambert to understand how our insurance expertise and data driven cedent audits can help gain insights into your business. 

Zack Wisniewski

Zack Wisniewski

Principal