The traditional life reinsurance model typically involves perpetual treaties linked to an underlying product. In order to create alignment between the contracting parties, the treaty would follow the underlying terms of the product. However, the treaty structure may concurrently include provisions that reduce alignment between the insurer and reinsurer, to the insurer's detriment. This approach is often wrapped in the reinsurer's "value proposition" - providing services to support the pricing, underwriting and claims management of the underlying product.
In today's operating environment, that "value proposition" is becoming less relevant as insurers now have the capabilities to develop their own customer proposition through improved access to data, market knowledge and skills for pricing, analytics and underwriting. This already applies for the mature markets in the Asia Pacific region, and is increasingly relevant for emerging markets where we are witnessing rapid growth and demand for insurance.