Operating Model for Small Reinsurers: Lean Team Design
On this page
- Operating Model for Small Reinsurers: Running Treaty, Accounting and Claims With a Lean Team
- Key Takeaways
- What Is an Operating Model for a Small Reinsurer?
- Why Can't Small Reinsurers Copy a Large Reinsurer's Model?
- Which Functions Must a Small Reinsurer Cover?
- How Do You Segregate Duties With a Small Team?
- How Should Key Functions Be Organised?
- What Should a Small Reinsurer Outsource?
- How Do You Reduce Key-Person Risk?
- What Does a Lean Team Look Like in Practice?
- How Should a Lean Team Handle Renewal Peaks?
- Where Does Automation Help?
- Which Metrics Show the Model Is Working?
- What Should CEOs and COOs Do Next?
- Key Terms
- Sources
- Frequently Asked Questions
Operating Model for Small Reinsurers: Running Treaty, Accounting and Claims With a Lean Team
Last reviewed: November 2026
A small reinsurer writes the same treaty forms as a global one. The difference is that one person often holds the knowledge a large reinsurer spreads across a department, and that person still takes holidays at renewal.
Short answer: An operating model for small reinsurers works when one treaty record feeds accounting and claims, and every task has a preparer and a checker. Outsource specialist work, but keep treaty terms and decisions in-house.
Key Takeaways
- Design around the treaty record. Accounting, claims and reporting all depend on correct treaty terms.
- Pair across functions. With few staff, segregation comes from cross-checking, not separate departments.
- Count single points of failure. Every task only one person can do is an operational risk.
- Outsource work, not responsibility. The reinsurer stays accountable for anything a third party performs.
What Is an Operating Model for a Small Reinsurer?
An operating model for a small reinsurer defines who does each task, which system holds the data and what is outsourced. It covers the full life cycle, from submission to closed claim.
It is not an organisation chart. Two reinsurers with identical charts can run very different processes.
Why Can't Small Reinsurers Copy a Large Reinsurer's Model?
Small reinsurers cannot copy a large model because it assumes depth in every function. A big treaty accounting team can segregate preparation and approval inside one department.
A small reinsurer has the same obligations with a fraction of the people. Its design must create control through process and data, not headcount.
Which Functions Must a Small Reinsurer Cover?
A small reinsurer must cover the same core functions as any reinsurer, however few people it has. The design choice is how each one is staffed.
| Function | Core tasks | Typical lean choice |
|---|---|---|
| Underwriting | Quote, negotiate, bind | In-house |
| Treaty administration | Record terms, amendments, renewals | In-house, often combined with accounting |
| Technical accounting | Accounts, premium, commission, settlements | In-house |
| Claims | Notifications, checks, recoveries | In-house, with overflow support if volumes spike |
| Actuarial and reserving | Reserves, pricing support | In-house lead, specialist reviews outsourced |
| Finance and regulatory reporting | Ledgers, statutory and solvency reports | In-house, with specialist support |
| Risk, compliance, internal audit | Control framework and assurance | Internal audit often outsourced |
| IT | Systems, security, access | Largely outsourced |
How Do You Segregate Duties With a Small Team?
You segregate duties by pairing people across functions, so nobody approves their own work. The pairs must be written down and evidenced.
EIOPA's guidelines on system of governance do not prescribe an organisational structure. They do expect an appropriate segregation of duties.
| Prepared by | Checked by (illustrative) | Item |
|---|---|---|
| Underwriter | Treaty administrator | Treaty set-up against the signed slip |
| Treaty administrator | Technical accountant | Amendments that change premium or commission |
| Technical accountant | Claims lead | Recovery entries on claims accounts |
| Claims handler | Claims lead or finance, by authority limit | Claim payments above a set amount |
| Finance | Risk or actuarial | Solvency and regulatory figures |
Adjust the pairs to your own team. What matters is that the pair is fixed and recorded.
How Should Key Functions Be Organised?
Key functions should be organised so each has a named holder who is independent enough to challenge. The EIOPA guidelines name four key functions: risk management, compliance, actuarial and internal audit.
Small reinsurers often use external support for some of these. Agree the arrangement with your supervisor, and record why it is proportionate.
What Should a Small Reinsurer Outsource?
A small reinsurer should outsource specialist or peak-load work and keep anything that defines the treaty or the client relationship. Responsibility stays with the reinsurer either way.
| Activity | Keep in-house | Consider outsourcing |
|---|---|---|
| Underwriting decisions | Yes | No |
| Treaty terms and amendments | Yes | No |
| Cedent and broker relationships | Yes | No |
| Internal audit | Oversight | Yes |
| IT infrastructure and hosting | Oversight and access control | Yes |
| Overflow claims handling | Decisions and authority | Possibly, under strict controls |
The EIOPA guidelines state that an undertaking remains fully responsible when outsourcing. For UK firms, the PRA's supervisory statement SS2/21 sets out outsourcing and third-party risk expectations.
In the EU, the Digital Operational Resilience Act has applied since 17 January 2025, including to ICT third-party arrangements. Our guide to outsourcing the claims function without outsourcing accountability covers the controls in detail.
How Do You Reduce Key-Person Risk?
You reduce key-person risk by moving knowledge out of people's heads and into shared records and procedures. Work through these steps.
- List single-person tasks. Ask each person what only they can do, and record it.
- Centralise treaty terms. Put every treaty, amendment and formula into one structured record.
- Write short procedures. Document each recurring task in one page, with the systems used.
- Cross-train in pairs. Have each preparer-checker pair learn the other's task.
- Build a calendar. Track account, settlement and reporting dates in one shared view.
- Test it. Have someone else run a task while the owner is away, and fix what breaks.
Scattered treaty terms are the most common root cause. Our guide to why there is no single source of truth for treaty terms explains the risk.
What Does a Lean Team Look Like in Practice?
A lean team in practice has fewer roles, each covering more of the life cycle, with clear checks between them. The example below is illustrative only.
Picture a reinsurer with around 60 treaties. Operations might run with two treaty and technical accounting staff, one claims lead and one finance and reporting lead.
The underwriters set up treaties, the accountants check them, and the claims lead checks recoveries. Internal audit and IT hosting are outsourced, with named in-house owners.
This works only if treaty data is entered once. If each person keeps their own spreadsheet, the checks stop being real.
How Should a Lean Team Handle Renewal Peaks?
A lean team handles renewal peaks by planning capacity months ahead, not by working longer hours in December. Renewals cluster around 1 January, 1 April, 1 June and 1 July.
Three habits make the biggest difference:
- Pre-build renewing treaties. Copy expiring terms into draft records weeks early, so only changes need keying at binding.
- Freeze non-urgent work. Agree which reports and projects pause during peak weeks.
- Add intake support, not decision support. Temporary help is safest on document handling, never on authority or approvals.
After each peak, record which tasks overran and why. That log tells you where the next process fix or tool belongs.
Where Does Automation Help?
Automation helps a lean team by removing rekeying and repeat calculation, so scarce people spend time on checks and judgement. People keep every decision.
Reinsurance treaty management holds structure, terms, participation, retention, limits and commission formulas in one record. It applies configured premium, commission and settlement calculation rules, with versioning and an audit trail.
Bordereaux calculation and reconciliation calculates premium and claim shares and identifies mismatches by reinsurer. Finance determines the cause.
Reinsurance Email Intelligence turns submission emails and attachments into one structured view. For Group Life and Credit Life, the Reinsurance Claim Core Platform adds authority limits and maker-checker approval.
Which Metrics Show the Model Is Working?
The model is working when output is on time and correct without heroics from one person. Track these monthly.
| Metric | What it tells you |
|---|---|
| Accounts issued on time | Whether the team has enough capacity |
| Corrections after issue | Whether set-up and calculation are reliable |
| Open reconciliation differences by age | Whether matching keeps up with volume |
| Claims waiting on information | Whether claims follow-up is under control |
| Treaties per operations person | Whether the model scales |
| Tasks only one person can do | Whether key-person risk is falling |
What Should CEOs and COOs Do Next?
CEOs and COOs should test the current model for single points of failure before the next renewal peak. Most fixes are process changes, not hires.
- List every task only one person can perform today.
- Assign a fixed preparer and checker for each financial item.
- Decide in writing what you outsource and who owns each arrangement.
- Move treaty terms into one structured record before adding more tools.
Key Terms
- Operating model: How people, processes, data and suppliers combine to deliver a business.
- Segregation of duties: A control where no one person prepares and approves the same item.
- Key-person risk: Dependence on one person's knowledge or access to complete a task.
- Key functions: Under Solvency II, risk management, compliance, actuarial and internal audit.
- Outsourcing: Using a third party to perform a function the firm would otherwise perform itself.
- Maker-checker: A control where one person prepares an item and another approves it.
Sources
- EIOPA: Guidelines on system of governance
- Bank of England, PRA: SS2/21 Outsourcing and third party risk management
- EIOPA: Digital Operational Resilience Act (DORA)
- Insurnest: Reinsurance Treaty Management
Frequently Asked Questions
What is an operating model for small reinsurers?
An operating model for small reinsurers defines who performs each treaty, accounting, claims and control task, which systems hold the data, and what is outsourced. A good model lets a small team run the full treaty life cycle without gaps in control or dependence on one person.
How many people does a small reinsurer need to run operations?
No single headcount fits every small reinsurer. The number depends on treaty count, lines written, claims volume, regulatory reporting and how much is outsourced. A reinsurer should size its team from measured workload per process rather than from a peer's organisation chart.
How can a small reinsurer segregate duties with few staff?
A small reinsurer can segregate duties by pairing people across functions, so the person who prepares an item never approves it. For example, treaty administration checks underwriting set-up, and claims checks accounting entries for recoveries. System audit trails make those checks provable.
What should a small reinsurer outsource?
A small reinsurer can consider outsourcing specialist or peak-load work such as internal audit, some actuarial reviews, IT infrastructure or overflow claims handling. Underwriting decisions, treaty terms and cedent relationships are usually kept in-house, and the reinsurer remains responsible for any outsourced function.
What is key-person risk in a small reinsurer?
Key-person risk in a small reinsurer is the risk that one person holds knowledge or access that nobody else has. Typical examples are the only person who understands a commission formula, or who knows where treaty amendments are filed, and that person being unavailable at renewal.
Do Solvency II governance rules apply to small reinsurers?
Solvency II governance rules apply to reinsurers in scope of the regime, including smaller ones. EIOPA's guidelines on system of governance name four key functions and allow undertakings to choose their own organisational structure, as long as there is appropriate segregation of duties.
Which systems does a small reinsurer need first?
A small reinsurer usually needs a single structured treaty record first, because every accounting, claims and reporting task depends on correct treaty terms. Calculation, reconciliation and claims tools add more value once the treaty data they rely on is reliable and in one place.
How do you measure whether a lean reinsurance operating model works?
A lean reinsurance operating model is measured by accounts issued on time, corrections after issue, open reconciliation differences by age, claims waiting on information, treaties per operations person, and the number of tasks only one person can perform. The last metric shows key-person risk directly.
Hitul Mistry
CEO, Insurnest
An InsurTech leader with more than a decade of experience across insurance and technology, focused on solving business problems with the help of technology. Has worked with brokers, insurance carriers, and reinsurance firms across the India, UAE, and US markets.
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