New York – Data integrity has its rewards, especially for reinsurers. In fact, when it comes to their ability to underwrite property catastrophe exposure, the biggest concern among reinsurers is quality of cedant data, according to New York-based Ernst & Young LLP’s 2008 Catastrophe Exposure Data Quality Survey. The study, released this week, found data quality can directly impact reinsurance pricing and capacity extension. According to the Insurance Information Institute, New York, reinsurance, a highly complex global business, accounts for about 7% of the U.S. property/casualty insurance industry premiums.
As the reinsurance business evolves and grows, the traditional reinsurance transactions between two insurance entities—the primary insurer and the reinsurer—are now being enhanced with risks of various kinds, particularly of natural disasters, being sold by insurers and reinsurers to institutional investors in the form of catastrophe bonds and other alternative risk-spreading mechanisms.
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