How Reinsurance Management attaches programs to policies

In a PolicyCenter policy transaction such as a submission, Reinsurance Management selects reinsurance programs to best meet the needs of the insurer, based on their business logic. This generally includes:

Providing reinsurance over the term of the policy, even across program years.
Providing coverage for each reinsurance coverage group of coverages on the policy.
Selecting programs and agreements in the same currency as the TIV/SI of the risks.

For each risk on the policy, PolicyCenter tries to find one program for each reinsurance coverage group. For example, if a location has two coverage groups, PolicyCenter links that location to a reinsurance program for each coverage group. PolicyCenter automatically manages reinsurance on policies that span program-year boundaries; no policy change is required.

Invalid draft reinsurance programs can cause problems

In PolicyCenter, you can create and save draft reinsurance programs that do not pass validation required to make the program active. You can save draft programs that have issues such as inconsistent dates, inappropriate retention levels, inconsistent reinsurance coverage groups, and inconsistent currencies. In your implementation, you can use validation to ensure that active programs meet business and regulatory requirements.

There is only a potential problem if a draft program gets attached to a policy that is then bound or issued. In the base configuration, PolicyCenter attaches an active program first. However, PolicyCenter attaches a draft program to a policy if it cannot find an appropriate active program. PolicyCenter evaluates the reinsurance using the draft program, which may not be valid and may not meet other business requirements. Additionally, the currencies in this program may be inconsistent with each other or with the total insured value or sum insured of the risk. If this is the case, the reinsurance calculation may fail ungracefully.

You can avoid these problems by ensuring that reinsurance programs and their agreements that might attach to policies pass validation and meet applicable business and regulatory requirements.