Skip to content

Designing effective Risk Profiles

Treaty renewals can be a very stressful process if your statistics are not done properly. The data may frustrate reinsurers whose choice is either to delay providing you the necessary renewal services or to increase their rate for information inadequacy. How do you negotiate your treaties effectively if your data is not reflective of your portfolio composition and performance. There are various statistical tools used in the treaty programming process and one of the critical reports is a risk profile.

A risk profile provides a picture of your portfolio in terms of the following aspects:

– Size of individual risks
– Total portfolio size
– Distribution of risks
– Pricing adequacy at various exposure levels 
– Portfolio balance (and more specifically treaty balance where the decision has already been made)
– Aggregate exposure 
– Cumulative exposure and profile per cresta zone or geographical zone

One of the most key advantages is the ability to profile claims according to the sum insured band and geographical zones. This information is often not available in most presentations. Therefore, the design of an effective treaty is negatively affected because the ultimate programme may not respond accurately to the portfolio claim patterns.

What if the system does not generate these risk profile reports? Our understanding of the basic design of the risk profiles can be an asset for any insurer. MUKFIN can generate these reports from raw data.

Mukfin has the capabilities to provide reinsurance treaty advisory services, including independent review and structuring of reinsurance programmes.

This article does not constitute advice.

MUKFIN is an independent international reinsurance broker.