Maintaining a long-term relationship and taking the time tolearn about one another's strategic plans and risk appetites areall critical factors in keeping cedants happy in their dealingswith reinsurers, a survey by the Flasp?hler Research Groupreveals.

“As we build on the one-on-one relationship–mainly trust–we getquicker and more flexible quotes,” according to one of the nearly700 respondents to Flasp?hler's “2009 Survey Of Ceding CompanyAttitudes About Reinsurance.”

The results of the survey by the Kansas City, Mo.-basedFlasp?hler (summarized on page 12) were released exclusively toNU.

The survey was initiated in 1993 and has been repeated every twoyears since. Thirty-five reinsurers and 20 lines of business wereevaluated by the 696 North American property and casualty buyersqueried (representing a 39 percent response rate).

“Because of our long-term relationship, we have gained a certainlevel of trust and loyalty that inherently improves therelationship,” noted one cedant among the 37 percent of respondentswho said their relationship with reinsurers is improving.

Respondents were invited to articulate how their relationshipswith reinsurers were improving and why.

“Better understanding of overall business strategies andunderwriting disciplines…provides better confidence in the overallbusiness,” said one.

“I value the personal relationships in a reinsurance partnershipand have found a transition back in that direction over the pastfew years,” added another.

“I have found our reinsurance partners very open to continuingto support us with our evolving business,” according to one cedant.“This is key to the long-term value of the reinsurancerelationship. We spend a lot of time outlining our business plansand directions, and most reinsurers believe in our valueproposition and have demonstrated a desire to reinsure us over thelong run.”

“More conversations are occurring due to the economic conditionsand the implementation of some new lines of business,” reportedanother respondent. “With increased communication come betterrelationships.

“The reinsurers we work with have been partners of ours for manyyears now, and because of the long-term relationship, we see themdifferentiating our company and business from the broader market,”said one cedant. “In other words, we increasingly feel like we arebeing given credit for the things that make our organizationdifferent.”

“There is a better understanding of our grass-roots problems,”noted another respondent. “The reinsurance world was becoming muchtoo financial-oriented, and the solutions presented were becomingtotal financial solutions.”

Reinsurers, suggested one cedant, are “becoming moreunderstanding of their own strengths and weaknesses and are nottrying as hard to be everything to everybody.”

“We have built the relationship on a long-term approach,” saidanother respondent. “There has been little turnover, so the primaryreinsurer we use knows our appetite, our employees and ourbusiness. This makes for an efficient placement of reinsurance. Thepricing is also very fair, with not a lot of cyclical pricechanges–a consistent market.”

Buyers said they have secured better relationships withreinsurers by being more open with them.

“We have made an effort to clearly communicate our company'sgoals, challenges and risk management techniques,” noted onerespondent. “I believe the improved transparency has helped ourreinsurers to better understand the nature of our business and therisks they are assuming–which in turn has given them greaterconfidence that there isn't any large, unidentified risk hidden inour program. We value long-term relationships and want ourreinsurers to trust us and to value our business relationship.”

However, it helps to have friends in high places, according toone cedant. “Having direct contact with the president of thereinsurer improves communication between both parties and allowseveryone in the transaction to be knowledgeable,” this respondentsaid.

Sometimes a cedant has to shop the market to regain theattention of their current reinsurer, suggested onebuyer.

“Our reinsurer was open to making our contract wording andpricing competitive when we asked for a quote from a competitor atthe same time,” this cedant said. “We wish that the changes wouldhave been possible without the need to take our program to marketfirst, but we were pleased with the response from our currentcarrier.”

Bottom line, according to one respondent, “reinsurers are hungryfor the business and are paying attention to the needs of companiesand are becoming more automated.”

The majority of those surveyed (58 percent) said theirrelationships with reinsurers were “not really changing.”

However, there were a few disgruntled buyers who took theopportunity to vent in the survey's open-ended questions. Nearly 5percent said their relationships with reinsurers were declining,compared to only 1.6 percent in 2007.

“Due to internal restructuring, we have less direct interactionwith our reinsurers. This makes it challenging to forge andmaintain positive relationships,” complained one cedant.”

“Reinsurers are placing less emphasis on long-termrelationships,” said another respondent. “Reinsurers want torecapture losses paid to ceding companies in a much shorter timeperiod. There is a huge disconnect between the hard reinsurancemarket and the soft primary market.”

“There seems to be little recognition of long-term relationshipsand our consistency in the market,” according to one cedant. “Afterseveral years of submitting zero losses, some reinsurers will justleave the program. If we did the same after a year of losses, thatwould not be appreciated [by insurance buyers].”

A few respondents cited the pressures of the tough economy asundermining their relationships with reinsurers.

“Market conditions are forcing the reinsurance professionals toreduce expenses, which in and of itself is understood,” said onecedant. “But the resulting effect is less competition in the directfacultative market and treaty reinsurance agreements beingnegotiated with slight or significant increases. It is puttingpricing pressure on primary insurers on the individual accountlevel.”

“Reinsurers seem to be looking for technicalities that willallow them to deny claims,” complained one respondent. “Also, theirdecisions seem to be made strictly based on their models. Businessjudgment and relationship seem to be much less important tothem.”

One cedant said that “the demands being placed on primaryunderwriters are onerous, and our business is being excessivelyre-underwritten.”

Respondents were also asked what feedback they would give totheir reinsurance brokers on how to better meet their needs.

“Show value other than buying lunches and dinners,” suggestedone cedant. “This includes bringing value to the relationship bydemonstrating expertise in product underwriting (understand ourbusiness), creative problem-solving, organization skills andfacilitation.”

This same respondent also wrote that brokers should “avoidcasting a paranoia cloud over letting clients and insurers speakdirectly with each other. Sometimes that just needs to happen, andquickly and easily without a third-partygatekeeper/bottleneck.”

“Become more sensitive to the fact we are the client and expectthem to know our business and be able to provide answers toreinsurers, even if they feel they need to discuss and confirmthose answers with us,” advised another cedant. “Too often they actas a Post Office, and I feel we are better off talking directlywith the reinsurer.”

“Take the initiative to optimize reinsurance structures anddon't wait for competition to come in and force you to respond.Don't take clients for granted,” concluded one respondent.