Business Need
A state department of insurance sought experienced assistance to determine accurate reinsurance balances, handle reinsurance processing, collect outstanding reinsurer balances and assist in commutations for a large liquidation.
Situation Analysis
The insolvent entity consisted of multiple statutory companies. Its reinsurance programs included a basic arrangement of reinsurance protections that were difficult to administer due to a lack of data integrity and overlapping coverage. Virtually all of the books and records of the company were maintained manually or on incompatible systems. Historical information was often stored as hard copy files. As a result, processes were manual and time consuming, requiring the compilation of information from multiple sources.
Barriers Faced
Unclear processes and insufficient controls combined with a lack of reinsurance contract information, inaccurate reinsurance attachment and cession calculation routines, and an overall lack of expertise resulted in the need for a substantial reconciliation effort. Lastly, UDS (Uniform Data System) files from the guaranty funds were riddled with incorrect coverage translations that required manual correction.
Paragon's Action
Paragon provided the resources and reinsurance expertise to ascertain accurate reinsurance balances. After identifying electronic data issues with both pre and post liquidation transactional details, Paragon established an improved process to calculate, validate and collect reinsurance recoverables. Paragon created an automated reinsurance attachment and cession engine to process all post liquidation activity. Resources were assigned to assist in commutation support and difficult negotiations.
Results
Paragon continues to provide complete reinsurance administration services to this customer, including reinsurance calculation, billing, collection and commutation support.
Specific benefits for the customer include:
- Automated calculation and attachment of reinsurance
- Ability to track open ceded recoverable balances
- Supportable and accurate accounting for reinsurance balances
- Commutation support and negotiation
- Improved data integrity and enhanced access to information
- Collection of over $19.8M