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Reinsurance

Insurance companies themselves taking out insurance to try and cover their backs and mitigate the risks on big claims. Understandably, it’s a huge part of risk management strategy undertaken by insurance firms. A little bit like pass the buck…

Reinsurance firms will make money by receiving a cut of the insurance premium (payment for the policy) that the original insurer makes on a policy. Quite often, insurance companies will offer reinsurance services as well.

Reinsurance: the hot potato game

As in insurance, actuaries play a big part in the reinsurance industry too; namely in risk management and pricing. They will work out the risk levels involved in each policy application using statistical and mathematical modelling. This will help to work out how much the premium (price paid for the policy) should be for the proposed policy, and also help to indicate which risks need to be transferred; the level of reinsurance necessary for the policy.  

On an administrative level, reinsurance technicians oversee the paperwork and processing elements of these policies, including premium settlements (payments when a valid claim is made). They will prepare renewals and quotations for clients. This takes a lot of attention to detail and a high level of organisational skills.

Reinsurance brokers

You may have heard of insurance brokers…well there are brokers that specialise in reinsurance too. Reinsurance brokers act as a middleman (an intermediary party) between insurers seeking insurance and firms providing reinsurance.

A reinsurance broker’s duties include analysis of insurance portfolios to assess risk levels and pinpoint where risk needs to be spread. The broker will then carry out research into what’s out there in the reinsurance market to find the best reinsurer for the job on behalf of the client, and make their recommendations to their clients. They’ll negotiate the best premiums for their clients and make commissions on every deal between insurers and reinsurers they seal. Whenever a client wants to make a claim, it’s up to the broker to support them in this process and handle proceedings to ensure it is settled (they receive their pay out) in a timely manner.

Reinsurance brokers are responsible for drumming up their own business, so business development (searching for potential new clients and winning them over through via cold calling, meetings and presentations on their services) is also a key part of what reinsurance brokers do.  So overall it’s about being able to build rapport quickly and have the confidence to pitch for new business and negotiate effectively, alongside exceptional market knowledge.

If you fancy a role in reinsurance, you’ll usually need to have a finance related degree, though it’s not always necessary. If you want an actuarial role, you need to have quantitative experience; it’s a competitive field, so start clocking up internship experience as soon as you can and work hard to bag at least a 2:1 for your degree classification.

Administrative roles can vary in salary, but are usually around the £25,000 to £30,000 mark.  Senior roles could be around £90,000 or sometimes more in actuarial roles, and there are often attractive commissions on offer for brokers.