Multicurrency and reinsurance

The base configuration of PolicyCenter with the Reinsurance Management enabled allows you to manage reinsurance in one or more currencies. The currencies may differ from the currency of the underlying coverages as well as from the settlement currency of the policy. This topic describes the base implementation, which you may extend to handle other reinsurance arrangements.

In PolicyCenter, the reinsurance currency applies to the risks in a policy. The reinsurance currency is independent of the coverage and settlement currencies. The reinsurance currency can be specified independently for each reinsurable risk, based on the characteristics of that risk or other business rules.

In PolicyCenter, a reinsurance program has a specified currency. All agreements in the reinsurance program must have the same currency as the program.

If you have reinsurance program that covers jurisdictions with more than one currency, then you can create duplicate reinsurance programs for each currency. For example, an insurer has negotiated a set of reinsurance agreements for Europe in euros. The insurer has also negotiated exchange rates to other European currencies. For reinsurance risks in France, the reinsurance currency is euros. For reinsurance risks in England, the reinsurance currency is British pounds. When putting these reinsurance agreements into PolicyCenter, the insurer creates one reinsurance program with the agreements in euros. The insurer creates another reinsurance program with the agreements in British pounds. The insurer manually converts euros to British pounds using the agreed upon exchange rate and enters the converted values in the agreements in the British reinsurance program.

PolicyCenter only attaches a reinsurance agreement to a risk in a policy if the total insured value/sum insured (TIV/SI) for that risk has the same currency as the agreement. In the base configuration, the TIV/SI currency is the currency associated with the jurisdiction of the risk. Through configuration, you can modify how PolicyCenter chooses the TIV/SI currency.

In the base configuration, individual risks are aggregated into reinsurable risks based on the location. Every coverable has an associated jurisdiction, so, at least within the base configuration, there are no reinsurable risks that span jurisdictions.