Sarbanes-Oxley Act
New Standards of Corporate Governance
- Process Controls
- Management Information
- View Sarbanes-Oxley White paper (PDF File 56 KB)
The Implications For Reinsurance Transactions
For the Insurer
Counterparty Risk
The eReinsure workflow allows for aggregation of facultative transaction data so that the Insurer can accurately measure their accumulated reinsurer counterparty risk.
Why is this needed?
Failure to monitor this risk accurately may result in overstated reinsurance protection and inadequate reserves in the event that a reinsurer is downgraded. The aggregation of such an impact on reinsurance protections could be material to an insurance company.
Contractual Certainty
A standardized control framework is an integral part of the eReinsure workflow. These processes are designed to ensure that all steps necessary to perfect the contract have been completed.
Why is this needed?
Failure to implement an appropriate internal control framework for reinsurance may result in an adverse opinion by external auditors. Such an opinion might impact the company's market value and cost of capital. It may also cause a negative reaction from regulators. Incomplete documentation may result in disputes and reduced reinsurance recovery in the event of a claim.
For the Reinsurer
Underwriting Information Quality
Standardized work processes are an integral part of the eReinsure workflow. A standard process helps to increase the quality of a reinsurance submission.
Why is this needed?
Failure to implement an internal control framework for ensuring the quality of submissions and exposure information may have a material impact on underwriting returns and reserving. It may also result in an adverse opinion from auditors.
Contractual Certainty
The standardized work processes of the eReinsure workflow are designed to ensure that all steps necessary to complete the contract have been completed.
Why is this needed?
Failure to implement process controls may cause reconciliation disputes and claims disputes. The aggregate result of such disputes may be a material impact on the company's earnings.
Account Clearance
The eReinsure workflow can assist in the clearance of submitted risks.
Why is this needed?
Failing to have an internal control to "clear" new accounts may cause over exposure to a specific risk or to an unplanned concentration of risks. The result may be a material impact on reserving and earnings.