Southern Guaranty Insurance Company (SGIC)

Miss Rudolph holds a B.S. in Mathematics with a focus on Actuarial Science from the University of Wisconsin Madison, a Master's in Nutrition from Northeast College of Health Sciences and an Executive MBA from Quantic School of Business and Technology. She started her career as a commercial insurance underwriter and then moved into MGA onboarding and management. AT present, Rudolph is working at SGIC, joining at the start of 2024 as Director of Product Development.

Through this article, Kathryn Rudolph sheds light on the crucial role reinsurance partners play in the product development process. She emphasizes that while reinsurers are often seen merely as capacity providers, their true value lies in their extensive expertise and industry connections. She highlights how reinsurers’ networks and access to advanced risk monitoring platforms can enhance product success. By fostering strong partnerships and aligning with reinsurer interests, insurers can secure better financial terms, drive innovation, and ensure a smoother market entry for new products.

Every year, we see so many new product entrants hit the insurance market, with a few being created maybe by myself. Working in product development or thinking about developing or changing a product in the insurance space can be a complex process of drawing on many resources, including internal and external experts and data. However, many forget to consider their reinsurance partners or potential reinsurance partners for anything other than capacity and I would like to shift your perspective.

It is true that reinsurers provide the capacity to write business and pay claims, protecting a carrier’s bottom line. However, the true power of a reinsurance partner is the breadth of expertise and experience they have at a national and, possibly, global level. This experience could be from a coverage or claims perspective, rate perspective and compliance perspective. This is why, even if you have a commitment from a reinsurer to support a new product idea or a product change, they should be engaged early and their opinions on potential risks should be sought.

Another way that your reinsurance partners may help bring success to your product developments is through their industry network. Reinsurers are often the connecting dots between carriers, frontiers and MGAs, complementary service providers, brokers/agencies, employee benefit providers, other reinsurers, etc. Having spent some time in the Insurtech industry, specifically in MGA arrangements, we found the connections of our lead reinsurer to be extremely valuable in creating and securing our full reinsurance panel and even carrier partner. Sometimes, having a reinsurance partner engaged with your product idea ahead of securing a carrier partner may even provide more carrier options, possibly leading to better financial terms.

Collaboration with a reinsurer is key in product development. Through their support and expertise, a product idea can be transformed into a successful market offering.

Additionally, building a partnership with a reinsurer may provide access to crucial information through their access to ownership of risk monitoring platforms, especially in the parametric insurance product landscape and risk and financial modeling software. These types of supporting platforms and software systems will typically be available through the larger reinsurers that invest in innovative technologies and have access to extra-large data sets that require this type of support. If they are made available for use, it will likely be beneficial to take advantage of their offering, as data should be in a format that will be more widely understood and reliable to the market you are in. Be aware, though, that some of these supporting tools and resources might not be free or available indefinitely and may want to be defined during contracting.

Thinking in the same terms, if your new products require financial modeling to be able to take them to market, you may want to consider a discussion with your reinsurer. Most reinsurers will perform their own financial modeling and forecasting, especially if they have data to test your rates against in-house rates. They may be willing to share their perspective and some analysis since it should be more lucrative to ensure alignment.

The last bit that I find to be important to stress when you are developing a product, and even after its delivery to the market, is that for it to be a true long-term partnership, expectations set out during the review need to be met and continually reviewed. I do not know about you, but time is not easy to come by and having to go to the market in search of new reinsurer partners each year takes a lot of time away from the day-to-day or even further expansion. A renewal with a current valued reinsurance partner or similar reinsurance terms is much preferred. Creating products and making product changes, keeping reinsurance partner interests in mind in addition to yours, will lead to more of those outcomes. Plus, it may provide additional production innovation support in the future.

Collaboration with a reinsurer is key in the product development space. Many innovations that have entered the insurance market may never have come to light without their support and expertise. They may be the connection or advice needed to knock your product out of the park and maybe even, most importantly, the supporting partner that enables a new product to enter the market. Recall that their network is often as vast as the small insurance industry, so ensuring they are included early and often and delivering on the terms of the partnership should lead to a better long-term product outlook.