Subject: SAP for Financial Services
In the insurance industry, reinsurance is a vital risk management practice where an insurance company (the cedent) transfers part of its risk portfolio to another insurer (the reinsurer) to reduce exposure to large claims and improve financial stability. SAP Insurance offers comprehensive functionality to manage reinsurance processes efficiently within its integrated insurance solution suite.
This article introduces the concept of reinsurance, its importance, and how SAP Insurance supports reinsurance management in the financial services domain.
Reinsurance is insurance for insurance companies. It allows insurers to:
Reinsurance can be structured in various forms such as proportional (sharing premiums and losses in agreed proportions) and non-proportional (covering losses above a certain threshold).
SAP Insurance, particularly modules like FS-CM (Collections and Disbursements), FS-PM (Policy Management), and FS-ICM (Incentive and Commission Management), includes specialized functionalities to handle reinsurance contracts, accounting, and settlements.
SAP supports the entire reinsurance lifecycle:
SAP Insurance allows insurers to create detailed reinsurance contracts, specifying terms such as:
This structured contract data ensures accurate and automated processing of reinsurance transactions.
Reinsurance premiums and claims are processed separately from direct insurance business but remain linked for reconciliation and reporting. SAP supports:
SAP integrates reinsurance accounting with general ledger and controlling systems, enabling:
SAP Insurance tracks risk transfers to reinsurers and supports regulatory reporting requirements, providing transparency on retained and ceded risks.
Reinsurance is a cornerstone of prudent insurance business practice, and managing it effectively is crucial for financial stability and growth. SAP Insurance’s reinsurance capabilities provide insurers with powerful tools to automate contract handling, premium and claims processing, and accounting—enhancing accuracy and efficiency.
For professionals in SAP Financial Services, mastering reinsurance processes within SAP Insurance is key to supporting an insurer’s risk management and regulatory compliance efforts.