Companies wishing to manage their insurance risks have long looked towards captives as a viable alternative to self-insurance. The captive market continues to flourish both domestically and abroad with small captives emerging as valuable players in their own right and growth being seen in new and emerging markets such as Latin America.
Today’s captives all have the same essential need (or major challenge, depending on who you ask!). That is to have accurate and fully auditable data that will enable them to make the right risk management decisions. Data must be consistent and easily accessible in a model that provides a ‘single version of the truth’ across the full breadth of their business. This means all processes – across underwriting, claims, retrocession and accounting – must allow the captive to be fully informed using multi-everything data.
But how does a captive make sure this is actually happening?
The key is to ensure that the right data is collected to begin with, and then, is processed correctly. As discussed in Peter Mogan-Hare’s article on achieving conformance without compromising performance, data feeds all aspects of an insurance company’s operations and the transparency and traceability of this data is core to ensuring consistency and integrity of reported information both internally and externally.
As captives continue to deal with ever increasing volumes of data, how that data is used and analysed has become more critical than ever. Yet, too many captives are finding that their software is preventing them, rather than helping them, to see the whole picture. Captives need to be asking if their supporting technology is going to help or hinder their ability to do business in 2016 and beyond.
Insurance and reinsurance systems should be able to offer a great deal of flexibility. Captives are often lumbered with software that makes them follow a set of rigid, prescriptive processes. With captives now looking for better transparency on the lineage of their risks, and with an increasing number of regulatory demands inevitably being placed on them, one thing their IT systems must be able to do is to cope with change.
It’s not rocket science. Captives should be able to ask if the software they are using to manage business is going to be able to meet certain basic requirements such as correctly validated data collection, a seamless flow between functions, audit trails and peer review capability and adaptable authorisation processes to accommodate different business lines and distribution channels. Collectively, these will ensure consistent data quality and thereby a ‘single version of the truth’.
A modern insurance platform should be able to streamline processes whilst supporting multi-currency, multi-taxes, multi-language and multi-operations. Naturally, it should also allow for multi-governance, compliance and reporting. Only once you know you have a “multi-everything” operation, can you really start to trust your data.