Data Quality Impacts Reinsurance Premiums

Data quality can directly impact reinsurance pricing and capacity extension when it comes to property catastrophe exposure. That’s the key finding of a new survey from Ernst & Young. According to its results, nearly all reinsurers (90 percent) acknowledge that they apply surcharges to compensate for data quality deficiencies, and among these 70 percent say they would include a 20 to 25 percent premium penalty. Additionally, more than one third say they would be willing to offer a minimum 10 percent premium credit for cedants with high quality data. Ernst & Young reports that the vast majority of reinsurers (92 percent) agree that if the cedant used strong collection, enhancement and data maintenance controls, the risk would be more attractive to them. Indeed, seven in 10 companies would consider extending additional capacity and 75 percent would consider offering premium credits of 5 percent to 15 percent to a cedant who could demonstrate strong controls and policies via an independent report. Check out further I.I.I. information on reinsurance.

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