This specification provides the definition of the Reinsurance core data message (RECORD) to be used in Electronic Data Interchange (EDI) between trading partners involved in administration, commerce and transport.
1.1 Functional definition
The RECORD message will convey to partners involved in the placing of a reinsurance contract or endorsement in a structured format all the required core data that form the basis of the negotiation process and of the ensuing contract (such as : contract sections and their criteria, clauses, coverages, deductibles, deductions and premiums, parties involved).
1.2 Field of application
The Reinsurance core data message may be used for both national and international applications. It is based on universal practice related to administration, commerce and transport, and is not dependent on the type of business or industry.
The RECORD message has been built up from a set of flexible modules which allow the specification of the function of the message, the contract details, the subdivisions within it and for each, its main characteristics (coverages, deductibles, deductions, premiums and applicable clauses), the party(ies) involved with tier involvement, special conditions and the response to them. The message can either be used in a "minimalist" manner - in which case only few data need to be provided (e.g. when first submitting a risk or when declining a risk), or in a "maximalist" way - in which case all applicable data can be provided (normally towards the end of the placing process). In addition to these business functions, the RECORD also links or points to various types of supporting documentation requested or available to supplement the EDI document.
RECORD is one of a complimentary pair of messages that support the placing of reinsurance business. RECORD carries the core business data related to the contract, whilst RELIST carries the list of items covered under the terms of the contract.
1.3.1 Scope and composition
The RECORD message performs multiple functions in the placing process, and therefore consists of a set of flexible components which can either be switched on or off - depending on the type of transaction within a specified scenario. These components include:
- a header that allows to identify the transaction function, to reference the reinsurance contract version with its relevant data, and the parties involved in the transaction;
- a group that allows to identify contractual or section criteria (class of business, type of peril, type of activity, location, clauses, currencies, etc.) and other characteristics (period, type of cover, etc.);
- the major subgroup within this section allows to identify coverages, deductibles, premiums, deductions and other relevant provisions per section or for the whole contract. Each can be either expressed as an amount, a rate, a quantity (e.g. number of lines, number of reinstatements) or a duration (e.g.
indemnity duration), and they can be linked to more specific sub-criteria (e.g. a section for class of business 'aviation', with coverages relating to 'luggage', 'passenger liability', etc.);
- a further group allows to refer to information that supports the placement process and that is either related to the whole contract or to one or more sections in it; it can be used both to request and to supply additional information.
- the last major information component in the RECORD contains party information; here again, multiple functions are foreseen:
a) rendering of information about the parties involved in the original policy (policy holder, insurer, co-insurers, broker);
b) rendering of information about the parties involved in the reinsurance contract (brokers, reinsurers); this functionality is sometimes referred to as the 'market list', and it is mainly used by brokers to inform cedents of the progress of the placement (reinsurers with share and conditions); at the end of the placing process, this list becomes the final placement list. Such a list can however perform others functions as well: a cedent may supply it to the broker as his 'preferred marketing list', a broker may present it to the cedent as his 'proposed marketing list', a cedent or broker may include it in his offer to reinsurers to show which other reinsurers have already signed on, etc. For this functionality, a small group with market specific details needs to be used.
c) an interesting aspect is that it is possible to report on 'composites' of reinsurers and their decomposition: a 'pool' with all its partners, a 'stamp' with the reinsurers behind it, a broker in a foreign market with the reinsurers that have signed via him, etc.
d) requesting a participation from a party - either as an amount, a percentage, a quantity (e.g. number of lines) or as a mixture of them; various options exist here: either only the format is expressed, the expected participation is given or a minimum-maximum range is offered. Additionally, previous written and signed lines can be specified for information.
e) responding to an offer - either by a quotation or an order which may either be conditional or unconditional; in case of a conditional order, a set of conditions can be specified for each potential order (e.g. I take 8% if condition A & B are fulfilled or 6% if only condition B is fulfilled).
f) responding to conditions; this is primarily done by quoting back the condition reference, supplemented with free text or by resending a new offer package with the condition references attached and a flag 'condition met' against each.
1.3.2 Functions covered
The functions that the RECORD currently caters for are:
- authorisation to build quotation request proposal
- propose quotation request proposal
- decline to build quotation request proposal
- accept quotation request proposal
- decline quotation request proposal
- request to modify quotation request proposal
- quotation request
- decline to quote
- accept quotation
- decline quotation
- order offer proposal
- order offer proposal acceptance
- decline order offer proposal
- request to modify order offer proposal
- request for participation
- decline to participate
- unconditional participation
- conditional participation
- accept participation
- accept conditions
- decline participation
- request to negotiate participation
- signed line advice
- request to modify contract synopsis, contract wording, closing, etc.
- accept contract synopsis, contract wording.
- endorsement request
- cancellation notice - provisional
- cancellation notice - definite
- decline endorsement request
- (unconditional) acceptance of endorsement request
- conditional acceptance of endorsement request
- endorsement notice
- request to negotiate endorsement
- decline all conditions
- withdrawal notice of cancellation
- advice cancellation method
- request additional information
- supply additional information (including wording, certificate and RELIST)
- request to modify additional information
- decline acceptance of supporting information
- party involvement report (proposed or actual)
- final bid request
- placement on hold
- placement cancelled-NTU (not taken up)
- placement released
- placement closed
- last bid offer expected
- final acceptance
See UNTDID, Part 4, Chapter 2.3 UN/ECE UNSM - General Introduction, Section 1.
3. TERMS AND DEFINITIONS
3.1 Standard terms and definitions
See UNTDID, Part 4, Chapter 2.3 UN/ECE UNSM - General Introduction, Section 2.
3.2 Message terms and definitions
'Placing' is basically the term used for the whole negotiation cycle to get a risk or a set of risks reinsured in the form of a reinsurance contract. As this process is identical to the endorsement cycle (whereby modifications to a contract such as extensions in time, in number or value of risks to be covered, in special conditions go through a negotiation cycle), this cycle has also been included in the placing process. Some other similar business cycles such as the cancellation, renewal have equally been covered.
The placing process is essentially not different from any buyer-supplier bidding process, although this simple fact is too often dissimulated behind complex procedures and specific terminology: the objective of the process is to find 'suppliers' that are acceptable for the buyer and that meet his requirements.
In this sense, the RECORD message could be used by any other industry in which a contract is negotiated.
Bidding round 1: the process is initiated by the prospective buyer who composes a package that consists of his tentative requirements along with any information that may help the prospective supplier to make his bid. This additional documentation may take any form and may comprise statistics, plans, bidding terms, original policy documentation, etc. This 'package' is transmitted to selected potential suppliers for a first bidding round. This sub-process is closed off upon reception of the bids from the suppliers. It is generally referred to as the 'quotation stage'.
Bidding round 2: the buyer has at this point two options: either he has received one or more firm bids that fulfil his requirements, in which case he confirms the acceptability of the bids to the relevant supplier(s); or else he uses the received bids to re-formulate his requirements, thus initiating a second bidding round.
This second round - generally referred to as the 'order' stage
- follows essentially the same pattern as the quotation stage, and it may very well be the only stage in the placing process; this is e.g. the case when a contract is renewed without obtaining a quotation first.
The process is closed off when the order offer is either accepted or rejected - possibly after more bidding or negotiation rounds.
The process may consist of a double loop instead of a single one in case the buyer requests another party (broker) to perform the placing process on his behalf; again, there is no essential difference: the buyer will first select in an initial bidding process the party to which he wishes to confer this duty. Afterwards, the process continues as described above with an additional feed-back loop from the broker to the buyer.
The endorsement process
The endorsement process is the one that is used to agree any type of change to the originally agreed contract; this may range from simple period extensions or cancellations to quite complex process types such as mid-term market changes. The process may be such that one type of endorsement request leads to another type of endorsement (e.g. a request for change in conditions may lead to a market change).
The endorsement process largely follows the same pattern as the placing process: the buyer (or supplier) requests the change from the other party, who in one or more discussion rounds agrees or refuses.
Main parties involved
- Cedent/ceding company/reinsured/retrocedent
The insurance or reinsurance company that seeks protection against a risk in the form of reinsurance or retrocession buying; hence the term 'buyer' is sometimes equally used; where the cedent is a reinsurer who retrocedes (i.e. re-sells) accepted business, the term 'retroceding company' is more commonly used - but the flows are identical, and therefore both are considered in the underlying document.
Company supplying reinsurance protection for agreed terms and conditions (the terms 'underwriter' and 'assuming company' are equally covered by this definition); if the reinsurer protects risks coming from another reinsurer, the flow is called 'retrocession'. Apart from these terms, there is little or no difference between the flow for 'cession' or 'retrocession' placing.
Intermediary between cedent and reinsurer. His function in the placing flows is essentially to ensure that a contract or endorsement with acceptable terms and conditions for the required cover is established, and that acceptable reinsurers are found to take part. Additionally, he will establish and facilitate the communication between the parties involved in the placing process. In return, he is paid a part of the premium that the cedent pays to the reinsurer, called the 'brokerage'.
4. MESSAGE DEFINITION
4.1 Data segment clarification
This section should be read in conjunction with the segment table which indicates mandatory, conditional and repeating requirements.