Insurance carriers today face a bevy of challenges to the financial health of their organizations. Such challenges have always been a part of the business of insurance, but today the complexities of healthcare reform, managed care, disease management, and other initiatives have changed traditional products and portfolios, requiring insurers to continually review their sources of capital and the demands on them.
Insurers are seeking creative ways to bolster and protect capital. Entities such as midsize insurance companies, HMOs, captives, health plans, and other risk retention groups may already partner with outside providers for administration of their plans. For protection of their capital, they look to reinsurance as a resource.
For many midsize insurers, reinsurance simply means stop-loss coverage. When costs for a claim reach a predetermined deductible, the reinsurer takes over, reducing claim loss for the insurer. However, another option is quota share, a form of reinsurance in which the insurer transfers (or “cedes”) to the reinsurer a given percentage of every risk in a defined category.
Although quota share programs are not as common as other types of reinsurance programs, interest in them is growing as carriers seek a balanced way to mitigate their costs from the first dollar of claims. The monetary savings benefit for quota sharing versus a traditional stop-loss program will vary depending upon the size of claims. For example, compare a 100% stop-loss program with a deductible of $50,000 to a quota share program where the reinsurer assumes 80% of the risk (80%/20%).
100% Stop Loss | 80% Quota Share |
---|---|
Plan pays $50,000 | Plan pays $80,000 |
Reinsurer pays $350,000 | Reinsurer pays $320,000 |
100% Stop Loss | 80% Quota Share |
---|---|
Plan pays $50,000 | Plan pays $200,000 |
Reinsurer pays $950,000 | Reinsurer pays $800,000 |
A quota share plan offers insurers additional benefits:
PartnerRe offers quota share reinsurance as an option. Using our extensive industry knowledge and unique combination of analysis and innovation, we design risk programs tailored to each client‘s exposure and risk tolerance. Our comprehensive approach focuses on providing the best risk protection through our experience in employing best practices from healthcare reform, managed care, disease management, and consumer-driven healthcare models.
By partnering with us, our clients gain access to additional value-added services including:
Insurers looking for experienced care and claims management to control risk will benefit from the reinsurance program options and additional services provided by PartnerRe.
Lea more about how PartnerRe can create a customized program to help your clients manage risk. Contact the experts at PartnerRe for more information.
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