Global re/insurance outsourcing and consulting specialist Pro Global Holdings has claimed that over $1 billion in global re/insurer reserves is sitting dormant in loss funds, despite all claims being paid in full.
The firm said it wants to support London market and global re/insurers in repatriating over the unused loss fund reserves, in line with market-wide claims and reserving digitisation and efficiency drives.
“The issue of repatriating redundant Loss Funds at re/insurers is significant; very large volumes of reserves – running into the tens and hundreds of millions in some instances – are currently sitting dormant despite all claims being paid in full. Some Loss Funds are even being written off entirely,” said Senior Technical Claims Consultant at Pro Global, Chris Doherty.
“By any standards this is an inefficient use of capital. Loss Funds are a vital element of insurance, and repatriating redundant reserves is an important element to the resilience of re/insurer balance sheets, particularly in the current economic climate.”
“However, we hear that daily workloads at re/insurer claims teams are often overstretched, and recovering such funds often falls by the wayside.”
Pro Global argues that the accuracy of loss fund reserves is critical for the efficient and competitive functioning of the market, and should be under the regulatory spotlight as new standards and initiatives are implemented.
“With the spotlight on cost savings and efficiency, as well as regulatory compliance, there is clearly strong recognition that the speed of claims payments and ensuing Loss Fund repatriation work must be improved, and we are issuing a call to action to the global re/insurance market to offer our support to help address this US$1 billion issue in 2023 and beyond,” Doherty said.
