Reinsurance Research Corner Reinsurance Mark-up Language (ReML)

1. Reinsurance Research CornerReinsurance Mark-up Language (ReML) Committee on Reinsurance Research Task force on ReML Michael Laufer James Matusiak Michael Tranfaglia Mark Verheyen

2. What is XLM? • XML (eXtensible Markup Language) is the electronic language of the Internet, facilitating real-time, multi-platform communication. • XML in P&C: a standard that addresses the real-time requirement by defining P&C transactions that include both request and response messages for underwriting, claims and accounting transactions

3. Broker Market Reinsurance Submission Data Flow – Current Ceding Company The ceding company compiles raw data from source files Broker The broker consolidates the raw data into a submission Reinsurer The reinsurer reformats the submission data for use in pricing models

4. How would ReML be used? • ReML would be used to efficiently streamline the transfer of information between insurers, brokers, and reinsurers via the XML standards. • ReML would impact: • Submissions • Pricing

5. Broker Market Reinsurance Submission Data Flow - ReML Ceding Company The ceding company compiles raw data from source files Broker The broker consolidates the raw data into ReML format Reinsurer The reinsurer inputs ReML data into pricing models

6. ReML Stakeholder Issues • What are the costs? • Cedant or broker would have to spend significant time / money up front to get submission data in standardized ReML format • Reinsurer would have to spend significant time / money up front to standardize inputs into pricing models • What are the benefits? • Time savings for reinsurers in scrubbing and inputting data • Quicker quote turnaround? • Reduced reinsurance premium for cedant if reinsurers pass savings along?

7. ReML Stakeholder Issues • Ceding Company • Is a ceding company willing to provide standardized ReML data submissions for broker markets if a direct market is willing to provide comparable terms and pricing without requiring data standardization? • Broker • Is a broker willing to standardize ReML data submissions for reinsurers in the hopes of obtaining quicker turnaround / better pricing from reinsurers? What if only a minority of reinsurers adopt ReML? Would brokers continue supporting standard? • Broker Market Reinsurer • Would a broker market reinsurer provide better terms / pricing or quicker turnaround for submissions provided in ReML versus non-standardized submissions? • Direct Market Reinsurer • Would a direct market reinsurer press a client to provide standardized ReML data submissions? Or would they see a competitive advantage over broker markets by being more flexible with data submissions?

8. Submissions and Pricing • Consistent data elements across submissions by LOB • Data can be downloaded directly into reinsurers pricing model(s). • No re-keying and manipulating data • Standard data set and definitions • Consistent content and quality

9. Advantages • This could decrease delays in the submission process by allowing standard data inputs into actuarial pricing models • Uniformity of information could potentially increase the efficiency of the reinsurance markets • ACORD data standards provide a building block for this project

10. Disadvantages • The cost on behalf of ceding companies may be too large to offset perceived gains in efficiency • The XML approach has not caught on with other areas such as financial statements • The scope of this project is massive

11. Questions • What actions are others taking with regard to collecting submission data? Who would oppose a standard? Who would favor a standard?