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Client case study

How outsourcing business as usual (BAU) functions within closed blocks helps insurers contain costs and increase efficiency

5 October 2022

The challenge

As their products evolve to better fit customers’ needs, life insurance companies face the ongoing challenge of managing products that have been discontinued but still have active policyholders on the books. Servicing these closed blocks takes valuable time and resources that insurers would rather dedicate to their forward-looking business goals and strategies, which may negatively affect profitability.

When Milliman’s client, a large U.S.-based insurance group, was looking to improve the management and administration of its closed blocks of reinsurance products, it was looking for a solution that was:

  • Cost-efficient
  • High quality
  • Flexible and scalable

If you’re like other insurers seeking to manage closed blocks of business more efficiently, you may be thinking:

“How do we more effectively contain the cost of managing products that are no longer being actively sold?”
“These policies have a long run, and we need a sustainable long-term strategy for managing the runoff.”
“By handling closed blocks internally, we’re dedicating too much time and too many resources to areas of our business that are not currently growing.”

The approach

Milliman’s global team based in Sri Lanka offered the client the ability to outsource all actuarial functions related to its closed blocks of reinsurance, resulting in efficient, cost-effective management of these policies for the long term.

Expertise of senior-level consultants

U.S.-based Milliman consultants serve as the primary client interface, offering familiarity with company operations, market specialization, and regulatory expertise, as well as accessibility during local office hours.

Highly scalable solution

Milliman is experienced in managing both short-term and long-term projects for clients all over the world. Outsourcing provides additional flexibility, including the capacity to increase or decrease the size of the consulting team to meet changing requirements and can be easily scaled to accommodate clients’ evolving needs. Milliman consultants have assisted the client on actuarial results production and multiple other projects, including assisting the client in implementing new reporting requirements, audits, and strategic initiatives such as rate revisions.

Automated reporting

Every month, Milliman provides the client with statutory reserve results, quarterly projections, and other deliverables. Milliman’s consultants have automated a large part of the process, which has added significant value and efficiency, enabling the client to easily meet reporting deadlines.

The solution

Over time, the client has outsourced all actuarial functions related to closed blocks of its reinsurance business to Milliman. Automation of statutory reserve reporting and other processes helps ensure accuracy and manage risk in a cost-effective, time-efficient manner.

Milliman’s global team also handles ongoing reporting and supports management decision-making, including:

  • Maintaining all models, documentation, and reports produced for valuation
  • Undertaking in-depth experience studies of mortality and lapse assumptions related to the policies
  • Making necessary revisions to pricing and corresponding updates to reinsurance treaties
  • Producing supporting material for communications with the client’s external auditors and state insurance regulators regarding audits and/or time-sensitive ad hoc queries

To support the client’s business planning, Milliman produces quarterly projections that incorporate U.S. generally accepted accounting principles (GAAP) and statutory reserves. The team also periodically reviews the effectiveness of all retrocession arrangements with third-party insurers and monitors claims experience related to the closed block.

By outsourcing the reporting and management for its closed block policies to Milliman’s global team, this insurer is able to redeploy inhouse resources toward higher-priority business goals with confidence, security, and ease.


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