Deloitte Uses @RISK to Advise Clients on Risk-Heavy Insurance Partnerships

Deloitte Uses @RISK to Advise Clients on Risk-Heavy Insurance Partnerships The insurance business is inherently risky—so much so, that many companies in that sector are finding ways to side-step some of its trickiest aspects. This adds a layer of complexity that requires careful risk assessment and decision making for those who are ultimately liable when the claims do come in. Global consultancy Deloitte uses @RISK to help clients with some of these delicate choices.

Cell captive insurance is a niche insurance industry that is growing in acceptance and use. A cell captive insurer allows other companies (i.e. the “cell owners”) to ‘piggyback’ onto the host insurer’s license, so that each of the cell businesses doesn’t have to deal with the prohibitive costs and regulations that come with buying their own licenses. The cell owners then perform certain functions on behalf of the cell captive insurer (“the insurer”) in respect to certain insurance products underwritten by the insurer. Cell captive insurers take on significant risk when entering into these types of arrangements. Not only is the insurer exposed to a range of operational risks, the insurer will also always remain liable for any valid claims related to policies written on its license, even if the insurer did not write the policies themselves. Experts at Deloitte risk management use @RISK to help cell captive insurance clients make informed choices around partnering with a cell owner.

“We help them perform a realistic assessment of what the risk is of partnering with a firm,” says Liran Blasbalg, an actuarial analyst at Deloitte South Africa.

Although Deloitte’s @RISK model and analysis are complicated, the results need to be clear when presented to decision-makers. Says Blasbalg: “@RISK also provides easy-to-interpret and useful summaries which would take time to prepare if done so without the software.” Deloitte has found @RISK to be a powerful tool for risk analysis around cell captive insurance, enabling them to advise clients in a risky and complex field.

Read the full case study here.

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