Commutation Assistance

Many reinsurance contracts are now running off without issue. For a substantial number of ceding companies however reinsurance contracts covering long tail liability can be an asset or a problem. During the past ten years we have seen an unprecedented number  of reinsurers go into run off or provisional liquidation. For cedants with long tail liabilities this presents a considerable problem where once their reinsurance security was AAA rated it is now a drain on their balance sheet. One solution worth looking at is commutation.

Commutation Provides:
1. Certainty in an uncertain world.
2. Cash rather than promises.
3. A reduction in servicing costs (you don't need to notify reinsurers of a claim any more).

Commutation Issues:
1. A reinsurer will always look for a discount on loss reserves.
2. You may not have confidence in your own loss reserves.
3. Reinsurers may utilise delaying tactics to force you into inappropriate commutation.
4. How can you ensure a uniform response from a subscription market?

BMS Solutions:
1. BMS have considerable experience of all types of reinsurance contracts involving commutation.
2. We are familiar with the companies and individuals involved.
3. We can structure either full commutations or ‘carve out’ commutations in accordance with what best meets your need.
4. We can advise on what will and will not sell and when to play hard ball or when to concede.
5. Twenty years of commutation experience.

Read more about Commutation Assistance in our Risk Advisory Services section >>

Also see Broker Run-off Services >>

Andrea Viera
Specialist - Broker Replacement Services
BMS Intermediaries Ltd