Re-insurance refers to the process under which insurance companies re-insure i.e. hedge across a range of other firms, the risks on their books. A re-insurance technician will take on a variety of roles within this process. This is a highly technical role and you will be expected amongst other things to collect debt, administer new re-insurance contracts, perform due diligence on existing, new and renewal contracts and write debit and credit notes.
Reinsurance is a highly technical business. It involves the transfer or indemnification of risk from one company to another. For example, an insurance company may issue a contract to insure houses against flood damage. If a single house is damaged by a flood then the insurance company will likely have sufficient resources to meet a claim. However, if there is a large flood and all the houses the company insures are damaged, the insurer’s assets may be insufficient to meet the needs of all claimants. In this event the insurance company could potentially go bust. Subsequently, an ordinary insurance company will normally approach (or be approached by) a specialist reinsurance firm such as Munich Re: or Swiss Re:. These firms will take on part of the risks of ordinary insurance companies on a case-by-case or bloc business basis.
The purpose of reinsurance is to reduce the risks to a single company and by derivation, wider parties such as governments, which may be adversely affected from the fallout of the initial event or bankruptcy of the original insurer. An example of the failure to adequately hedge risks of a single large insurer was evident in the recent AIG nationalisation in the US.
Reinsurance technicians play a pivotal role in this process and will normally specialise in a particular area such as aviation or marine risks. The range of risks is hugely diverse and insurance specialists will exist in everything from catastrophe risk, to aviation risk to entertainment. In taking a risk onto its books the re-insurer has to make a judgement call as to the statistical likelihood of a claim being made and also future developments which may fundamentally change the nature of the risk.
A reinsurance technician may be involved in this process or may be responsible for looking at and processing claims. There are, however, several facets to the role:
Reinsurance technicians may assist underwriters and work with a variety of other professionals such as lawyers, statisticians and scientists, to develop views on the current and future risk probabilities. Their role is to assist in the evaluation of existing and new business including negotiating with insurers about terms, conditions and prices. They will help underwriters and brokers build bespoke insurance programmes to protect the re-insurer and meet the objectives of their clients based on price and other technical factors.
There are a variety of legal restrictions that may apply and these may vary across countries. Reinsurance technicians may be expected to work with lawyers in order to draft documentation and create policy wording as appropriate, or amend policies for renewals.
Actuarial and Pricing Analysis
You will work with actuarial professionals to monitor the pricing of re-insurance contracts. You will be expected to work on drafting initial pricing.
You will be expected to process claims and renewal policies, and to monitor policies to make sure that their technical provisions are being met. You will also be responsible for collecting debts on existing policies.
Starting salaries will normally be between £25,000 and £40,000, although they may be considerably higher than this. Technicians with substantial experience of a particular area will be able to command salaries in excess of £100,000
As a re-insurance technician you will be expected to:
- Engage in general management of contract documentation including drafting slips, cover notes, binders (record of reinsurance arrangements pending the issue of a formal reinsurance contract) and re-insurance contracts.
- Work on Treaty Accounts (an agreement between the insurer and th
e reinsurer, which stipulates technical particulars).
- Process and assist in the calculation of Excess of Loss premiums (provide conditions for a certain predetermined threshold to be met before the reinsurer becomes liable).
- Evaluate risks within a portfolio and the potential liability to the reinsurer from indemnifying an insurer.
- Prepare credit and debit notes.
- Check that the reinsurer is not in breach of the conditions of its reinsurance contracts.
- Process and record details of reinsurance claims.
- Produce statistical reports on claims.
- Gather evidence and form a view on how the risk fits within the overall portfolio of risk e.g. is it hedged against another risk on the portfolio?
- Generally support brokers, underwriters, account managers and other team members.
- Provide background analysis to allow underwriters to assess whether a contract is reasonable and the terms of acceptance for the contract.
- Negotiate terms with insurance companies.
- Help to draft policies and advise lawyers of appropriate exclusion clauses.
- Keep meticulous records of claims that have been processed and those which have been finalised.
You will be expected to have strong academic qualifications including high grades at A and AS levels or equivalent. In most instances you will need to have achieved an honours degree with a minimum of a 2:1 classification. There are no specific degree subjects required but degrees in business related subjects such as business studies, actuarial sciences, mathematics, statistics or economics may be beneficial.
Due to the nature of the industry, reinsurance companies are normally very large organisations. Most will have structured graduate-schemes and will encourage you to pursue professional qualifications. There is a range of insurance qualifications available. While the majority of employers require relevant experience most will not require a specific qualification. However, when applying for jobs you are likely to benefit from demonstrable qualifications. It is possible to study for an MSc in Insurance and Risk Management as well as a series of more generalist courses: These include:
- Advanced Diploma in Insurance
- Certificate in Contract Wording
- Fellowship in Insurance
- Award in Insurance
Your employer will likely provide advice on which qualifications are appropriate for you. Those working for a Lloyds of London syndicate will be expected to take Lloyd’s and London Market Introductory Test (“LLMIT”).
If you are looking to study independently or in order to move into the industry, the Chartered Insurance Institute (“CII”) offers a wide range of generalist courses. The basic qualification is the Award in Insurance which provides an introductory-level study programme developing fundamental knowledge on key topics.
- Attention to detail – you will need to ensure that all conditions of a claim are met to ensure that the claim can be processed and validated.
- Technical knowledge of the insurance industry.
- Ability to work to tight deadlines.
- Strong organisational skills.
- Good numeracy and literary skills.
- A working knowledge of computers and computer programmes such as Excel and Word.
- For some roles you will need knowledge of specialist programmes such as IRIS and LORS.
- Excellent interpersonal, customer care and communication skills.
- For specialist areas you may require very specific skills.
Office hours are normally 9-5; however, this is a highly competitive business and you may be expected to work overtime or weekends. You will normally work from an office and the majority of your time will be spent using computers at your desk.
Although the recent financial crisis has reduced the number of jobs available, the insurance industry and wider financial services industry in the UK is still one of the most important employers. The majority of roles will require you to have experience at a reinsurer or Lloyds syndicate. As a consequence, most people will start out by applying for a graduate position with a reinsurance company, Lloyds syndicate or major insurance company. It is also possible to complete an internship with larger companies but you should apply early.
Re-insurance is a highly specialist field and is dominated by a few large companies and the Lloyds syndicate:
Lloyds of London – Lloyd’s is the world’s leading insurance market providing specialist insurance services to businesses in over 200 countries and territories.
Working as a reinsurance technician can provide excellent exposure to a range of highly technical insurance roles. The reinsurance industry is very similar to the insurance industry but the scale of the risks and claims are likely to be much higher, running into millions and billions and transcending geographical boundaries. Natural moves may be into underwriting or brokerage. You may also move into risk consultancy.
Also known as…
- Reinsurance Technician
What’s it really like?
Scott Mason, is a Reinsurance technician
How long have you been in this particular job / industry?
I entered the industry back in Sept 2002 and have stayed in it since then. I have been in my current job for 10 Months, having started in Dec 2008.
What did you do before this job?
Before my current job I worked for a Reinsurance Broker, essentially processing claims and collecting balances which were due to my clients. Before that I was working for the AVIVA group in their Norwich office.
What do you do in a typical day at work?
My job involves processing claims on the back of our reinsurance policies and arranging for the collection of debt accordingly. I am also responsible for producing reinsurance reports, calculating recovery rates and processing premiums. I monitor claim movements on our Inwards Business and apply our Reinsurance programme where necessary. I review outstanding debt and chase brokers & reinsurers accordingly. I also have to respond to reinsurer queries following presentation of claim information.
The reinsurance business is somewhat seasonal as there is traditionally a renewal season from September to March and the summer months are a lot less busy. My days will vary depending upon what is going on, but as a standard I start by reviewing what is on my to do list, any voicemails and e-mails that have come in overnight and catching up with the rest of the team. The reinsurance business is by definition global in nature, and developments and new claims can come in at any time.
The remainder of my morning is normally spent working on slips or preparing renewal information for policies. I have an hour for lunch but will typically have lunch at my desk unless I am meeting with a colleague or contact.
In an afternoon I may spend time liaising with brokers or other members of the Lloyds syndicate. The insurance industry involves a wide range of professionals from modellers and statisticians who work alongside the underwriters, to brokers who are responsible for speaking with insurers and bringing business in. There can be a huge variety of different projects. On a daily basis I may work on a renewal, however, I may also have to work on larger projects such as working on our renewals database or providing technical analysis of endorsements. Some projects may last many months.
I also am in the process of taking professional qualifications and have recently sat the LLMIT.
What do you like about the job?
I enjoy having a portfolio of work and ensuring it is always in the best shape it can be, with minimal outstanding debt and any queries being promptly addressed. I am currently involved in the development and creation of a new suite of reports which will be rolled out through the team. I thoroughly enjoy being involved in the operational aspects of how our team runs and is driven, so at present this is an area I am getting more heavily involved with.
Reinsurance is a global industry and there are a lot of opportunities to meet people and travel around the world. No two days or contracts are necessarily the same and you have to develop bespoke solutions and look to provide insurers with competitive quotes. The reinsurance industry is a tough and challenging environment but very rewarding. You have to be very “people smart” in this job and be able to work with a range of people.
The salary is generally very good and most large firms offer a competitive all round benefits package. There is also a good social scene at the Lloyds syndicate with lots of young people and regular nights out, 5-a-side etc.
What do you dislike about the job?
Basic data entry tasks which can become repetitive. Unfortunately they are a necessary evil.
What advice would you give to someone thinking of doing this job?
Make sure you do a professional qualification which may be offered by the employer. They provide a superb formal level of knowledge which cannot be gained from on the job learning. I have only just started my qualifications (I regret not starting them 7 years ago) and am currently working towards my ‘Certificate in Insurance’ accreditation. Once completed, I intend to move on to the ‘Diploma in Insurance’ and then onto the ‘Advanced Diploma in Insurance’. The Chartered Insurance Institute are the main supplier of these industry qualifications.
Reinsurance is a very specialist field. You will also need to be self-motivated to be successful in this role. It’s important that you look to build good relationships with both your peers and competitors. This job is by no means a go-it-alone role and you need to be able to work with a wide range of both very technical and sales driven individuals.
I’d also recommend that you look to complete a relevant qualification; there are a lot of qualifications on offer but most employers will sponsor you or provide some kind of incentive.
What job(s) do you think you might do after this role (i.e. career progression)?
I really enjoy what I do on a day-to-day basis. However, I may look to specialise in debt collection of long outstanding balances, simply because it is an area I appear to gain good results in. Alternatively I think my next role may be in a Management support role where I ensure the operational workings of a team are at the best level they can be.