The use of automated reinsurance administration technology isgrowing, but only one out of three insurers is reaching that level.The remaining two-thirds are still using partially automated ormanual systems.

According to a survey conducted on behalf of Inpoint Services,an Aon company, 32 percent of insurance companies use comprehensivetechnology systems to support their reinsurance processing, up fromjust 17 percent in 2005. However, 42 percent of insurers still usepartially automated systems and 26 percent rely on manualprocesses, such as spreadsheets.

The survey of 138 insurers found there is a direct correlationbetween company size and technology use. Only 23 percent of smallerfirms (those with less than $100 million in ceded premium) havefully automated systems, while 57 percent of large companies (thosewith more than $500 million in ceded premium) have fully automatedsystems. Even among companies that are highly automated, sizedictates the type of systems used. Small companies tend towardoff-the-shelf software, while larger firms tend to develop theirreinsurance administration technology in house.

"Considering that reinsurance recoverables are among mostinsurers' largest assets, the number of companies relying onpartially automated or even manual systems is surprising," saysMark Richtmyer, senior account executive at Inpoint Services."Fortunately, the survey found that the use of fully automatedtechnology is growing. That said, companies contemplating newtechnology should give special consideration to how they willintegrate their new systems with the processes and human resourcescurrently in place."

The survey found nearly 20 percent of responding companies haveused the same partial or comprehensive reinsurance administrationtechnology for more than 15 years. Only 27 percent of companiessaid their systems were less than five years old. Reasons cited forthe reluctance to update systems include budgetary constraints andlengthy implementation periods. Many firms claim their existingsystems meet their current reinsurance processing needs.

Electronic document storage, in the opinion of those surveyed,increased efficiency by at least a two-to-one margin. Sixty-twopercent of respondents said they electronically stored all theircontracts, 49 percent electronically stored all their claims, and44 percent stored all their reports this way. The wider usage ofelectronic storage for contracts is likely due to the static natureof the documents and the need for access by multiple users.

While technology typically boosts efficiency, the survey foundthat large companies with highly automated systems do not receivereinsurance payments as quickly as companies with lesscomprehensive technology. However, the delays are attributed toother reasons as improper loss notices and insufficient lossdocumentation.

Inpoint Services' survey of managers and executives at 138insurance companies in the U.S., Canada, and Bermuda was conductedin 2009 by the Leede Group. The entire report can be viewed atwww.Inpoint.com.