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Poor Data Quality Hikes Reinsurance Costs

Reinsurers surcharge to compensate for data deficiencies, Ernst & Young finds

By Caroline McDonald | Updated on September 07, 2008

The quality of primary insurer underwriting data could be affecting their reinsurance purchasing costs more than they realize, according to a survey by Ernst & Young, which found that almost all reinsurers levy a surcharge to compensate for unreliable cedant data, while most would cut premiums if quality could be assured.

Quality of critical data can include the number and location of buildings owned by an organization or the number of retail outlets, said Trish Conway, an actuarial advisor in the Insurance and Actuarial Advisory Services practice of Ernst & Young, in the firm’s New York office.

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