Managing Treaty Structures When Your Core System Can't Keep Up
Operating Around a Core System That Wasn't Built for Today's Treaties
Not every reinsurer can replace or overhaul its core system on the timeline a growing book of structured business would prefer. In the meantime, someone has to manage the risk that comes from tracking sliding scale commissions, shared reinstatement layers, and parametric triggers outside the system everyone assumes is authoritative. That's a management problem with real, practical answers, even if it isn't a permanent substitute for fixing the underlying gap.
What Controls Actually Reduce This Risk?
A formal log of every treaty structure that required a workaround, including what the workaround is and who owns keeping it current, is the single most effective control available.
Without that log, workarounds exist informally, scattered across individual underwriters' spreadsheets with no central visibility. With it, operations and leadership at least know where the gaps are, which is the precondition for managing them deliberately instead of discovering them by accident during an audit or a claims dispute.
Who Should Own Maintaining These Records?
The underwriter who wrote the deal should record the workaround at binding, but a central operations or data governance function should own tracking it across the full book.
This split matters. The underwriter has the context to capture the workaround accurately at the moment the deal is struck. A central function is needed to make sure that record doesn't get orphaned once the underwriter moves on to the next renewal, and to maintain a consistent view across every structured treaty in the portfolio, not just the ones any one person happens to remember.
How Often Should These Records Be Reviewed?
At minimum each renewal cycle, since that's when a workaround's terms are most likely to change and when the risk of the record drifting from the treaty's actual current terms is highest.
A Treaty Compliance Monitoring AI Agent can help enforce this review cadence by flagging structured treaties due for renewal so their workaround records get checked and updated as part of the normal renewal process, rather than as a separate, easily skipped task.
What Happens If a Workaround Record Goes Stale?
The spreadsheet everyone relies on silently stops matching the treaty's current, amended terms, and nobody finds out until a claim, an audit, or a reporting request exposes the gap.
This is the biggest operational risk in this whole approach. A stale record isn't just inaccurate; it's actively misleading, because people continue to trust it as if it were current. The longer it goes unreviewed, the more consequential the eventual correction tends to be.
| Control | What It Addresses | Owner |
|---|---|---|
| Workaround log | Visibility into which treaties are affected | Underwriting at binding |
| Renewal-cycle review | Drift between record and current terms | Central operations |
| Audit flagging | Auditor awareness of non-system records | Compliance or audit function |
| Escalation threshold | When to prioritize a permanent fix | Technology and operations leadership |
Should Workaround Structures Be Flagged Differently in Audits?
Yes. Structures tracked outside the core system should be explicitly flagged so auditors and reviewers know to check the workaround record rather than assuming the system holds the full picture.
Without this flag, an auditor reviewing the core system's data has no way to know a given treaty's terms are incomplete there. A Treaty Data Quality Checker AI Agent can help surface which records in the system are flagged as partial or workaround-dependent, making that distinction visible automatically instead of relying on institutional memory.
Does This Approach Scale as More Structured Deals Get Written?
It scales reasonably well for a while, but the administrative burden grows with each additional workaround, which is exactly why it should be treated as a bridge, not an end state.
Every new structured deal adds another record to track, another renewal cycle to review, another point where drift can happen. The controls described here manage that growing burden; they don't shrink it. At some point, the volume of workarounds makes a more permanent fix the more efficient path.
Operating controls buy time. They let a reinsurer keep writing the structured business the market wants while a longer-term technology decision gets made properly, rather than under deadline pressure. The reinsurers that manage this well are the ones that treat the workaround log itself as a signal, watching it grow, and using its size to make the case for the fix it's standing in for.
Frequently Asked Questions
Can operating controls really manage this risk without fixing the system?
Controls can reduce and contain the risk considerably, but they cannot eliminate it, since the underlying gap between what the system can represent and what's being written still exists.
What's the first control a reinsurer should put in place?
A formal log of every treaty structure that required a workaround, including what the workaround was and who owns keeping it current, so the exposure is at least visible.
Who should be responsible for maintaining workaround records?
The underwriter who wrote the deal should record the workaround at binding, but a central operations or data governance function should own tracking it across the full book.
How often should workaround records be reviewed?
At minimum each renewal cycle, since that's when a workaround's terms are most likely to need updating and when the risk of drift between the record and the actual treaty is highest.
What's the biggest operational risk of unmanaged workarounds?
The biggest risk is that a workaround record silently goes stale, so the spreadsheet everyone still relies on no longer matches the treaty's current, amended terms.
Should workaround structures be flagged differently in audits?
Yes. Structures tracked outside the core system should be explicitly flagged so auditors and reviewers know to check the workaround record rather than assuming the system holds the full picture.
Can this management approach scale as more structured deals get written?
It can scale reasonably well for a while, but the administrative burden grows with each additional workaround, which is exactly why it should be treated as a bridge, not an end state.
How does a reinsurer know when workarounds have become too many to manage manually?
A useful signal is when the time spent reconciling workaround records exceeds the time it would take to build proper structure support directly into the system or a connected tool.
