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We have come a long way from the intensive manual and time-consuming efforts of 20 years ago. However, as much as we have progressed in reducing the manual effort, the complexity and requirements for reinsurance processing data and Schedule F information continue to grow to this day.
Today reinsurance processing is all about auditability, timeliness and accuracy. Carriers must be able to produce a defensible audit trail for Schedule F transactions and for their reinsurer’s information or they risk additional Schedule F penalties and may even be required to refile their financial statements. This would be a very costly outcome in terms of expense and reputation.
A defensible audit trail all begins at the reinsurance processing level. Does the carrier’s reinsurance system or process provide an audit trail for reinsurance transactions? The carrier must be able to substantiate the Schedule F transactions to its management, regulators and auditors. Typically, auditors want to see the details of these transactions, including the associated direct transactions and the identification of the originating source(s) system. This is a tremendous task to do without automation. And when it comes to top side Schedule F adjustments, auditors require well documented reasons for these types of entries.
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