In Continental Europe insurers and reinsurers have traditionally opted to handle most of their discontinued business in-house alongside their ongoing business, but this is going to change.
Many of the larger organisations are now starting to recognise the need for a different set of management skills to deal with run-off more efficiently and effectively. There is greater awareness and appreciation of the tangible benefits of focusing on this business.
If a quality third party service provider is appointed, the overall cost of a run-off can be significantly reduced. Their objective is to facilitate a clear and objective view of the insurance liabilities and assets by analysing different types of risks, the policy, claims profile of insureds and cedants and the nature of insurance protection. Furthermore a third-party service provider cares for financial aspects of various exit strategies and the tax consequences of each of them.