Scottish Re evaluates risky data

Reinsurer Scottish Re Group has introduced an electronic data interchange (EDI) system for its customers to help the company manage risk on the 'lives' it takes on.

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The insurance market can hold an element of risk if a policy has a high value or is subject to unpredictable conditions. To spread that risk, policies may be reinsured by the insurer.

Scottish Re, which is organised under the laws of the Cayman Islands, specialises in reinsuring life insurance and annuity-type products in the US.

Scottish Re receives anywhere up to 350,000 records per month pertaining to the individuals, or 'lives', being insured. Up to now, this data has been received in a variety of forms and had to be entered manually into a spreadsheet.

Scottish Re head of IT Andrew Wild was brought in to the company in the summer 2006, at the same time the project was kicked off.

He said: "We would have the actuaries receive the data and load it into an Excel spreadsheet. Analysis was done on a case-by-case basis. Accumulation of data in a central repository was almost non-existent."

This took time but, more importantly, Scottish Re was not able to make sure it was already reinsuring a specific life's policy through another insurer. To reinsure another policy taken out for that specific life would expose Scottish Re to more risk, especially if it was of a very high value.

In order to be able to make that type of check, Scottish Re had to move to a more automated process of receiving policy data.

Wild said: "Business partner data comes in multiples formats from different clients, so we needed an EDI approach to scrub all incoming data, standardise it, transform it and load it into a centralised data warehouse."

It chose an EDI system provided by Pervasive Software that allows data to be sent in as Ascii text or CSV files and integrated directly into the company's data warehouse.

Wild said: "Custom code could not deliver what we wanted. Our IT mandate was straightforward - get more complete data quickly into our analyst's hands."

The project came in on time, despite a limited "business input" from the company which, at the time, was rationalising some of its business operations.

Scottish Re has recently signed its fifth client up to the system, but Wild is hopeful a sixth will be in line by the end of the year.

He said: "The system is so adaptable now that it should be able to accept data in any format, so we don't have to be too restrictive about which clients we include."

Wild will conduct a strategic review of the system after 18 months of operation next year. In the meantime he has also conducted a back office systems strategic review and decided to remain with the service provided by CSC.

He expects to start exploring ways in which the EDI system can be integrated more fully into the back office systems in the future now that he has a solid roadmap with CSC.