When your CFO asks what the reinsurance program actually delivers, you need more than a broker presentation deck. You need a document that connects every dollar of premium to a specific risk transfer outcome, capital efficiency gain, or program design feature your organization cannot replicate internally.
This template gives you that document. It's designed for risk managers and underwriters preparing for renewal negotiations in a market where reinsurers are competing on innovation rather than price alone. Use it to evaluate whether your current program justifies its cost and to frame conversations with reinsurers who claim they offer more than capacity.
Purpose of the Template
This template is a program value justification framework. It helps you articulate why each reinsurance structure exists, what risk it addresses, and how to measure its effectiveness. You'll use it in three situations:
- When your finance team questions the ROI of a reinsurance program that hasn't generated claims
- When evaluating competing reinsurer proposals that look identical on pricing but claim different value propositions
- When explaining to senior leadership why switching to a lower-cost reinsurer might increase total cost of risk
The template is suitable for treaty reinsurance programs across property, casualty, and specialty lines. It's less applicable for facultative placements where value is tied to a specific large exposure.
Prerequisites
Before you fill this out, gather:
- Your current reinsurance structure documents (treaty wording, attachment points, limits)
- Premium costs for the last three years
- Claims history against the program, including near-misses where coverage was triggered but losses stayed below attachment
- Your organization's risk appetite statement or tolerance thresholds
- Capital allocation models if your finance team uses them
- Any aggregation scenarios or stress tests that informed the program design
You'll also need access to someone who understands your regulatory capital requirements. If your reinsurance program provides capital relief under Solvency II or similar regimes, include that quantifiable benefit.
The Template
Section 1: Program Structure Summary
List each reinsurance treaty or layer. For each one, state:
- Coverage type (e.g., Excess of Loss, Quota Share, Aggregate Stop Loss)
- Attachment point and limit
- Annual premium
- Reinsurer(s) and their security rating
Example entry:
Property Catastrophe XOL: $50M xs $25M retention, $3.2M annual premium, placed with [reinsurer names], average A+ rated
Section 2: Risk Transfer Justification
For each treaty, answer:
- What specific risk does this structure address that we cannot retain?
- What would happen to our balance sheet if this coverage did not exist and the risk materialized?
- What scenarios or loss events informed this attachment point?
Guidance: Be specific. "Catastrophe protection" is not sufficient. Write "Protection against hurricane losses exceeding our $25M retention, based on PML analysis showing a 1-in-100 year event could generate $75M in losses." If you cannot articulate the scenario, the structure may not be justified.
Section 3: Capital Efficiency Analysis
For each treaty, document:
- Does this program reduce regulatory capital requirements? If yes, by how much?
- Does it improve our debt covenants or credit rating metrics?
- What is the opportunity cost of the capital we would need to hold if we did not buy this coverage?
Guidance: If your finance team uses a cost of capital figure (often 8-12% annually), multiply the capital you're freeing up by that percentage. That's the annual economic benefit you can compare against premium cost. If the program costs $3M but frees up $40M in capital with a 10% cost, you're generating $4M in value before considering risk transfer.
Section 4: Program Design Features Beyond Capacity
List any reinsurer-provided services or program features that add value:
- Claims handling support or expertise in complex claims
- Risk engineering or loss control services
- Access to data, modeling, or Aggregation Exposure Analysis
- Participation in structured solutions (loss portfolio transfers, adverse development covers)
- Flexibility in coverage terms that address emerging risks (e.g., cyber aggregation protections, AI liability extensions)
Guidance: Demand for aggregate covers, loss portfolio transfers, and adverse development covers is growing because clients need solutions for volatility and legacy exposures, not just capacity. If your reinsurer provides these, document them. If they don't, note that as a gap.
Section 5: Emerging Risk Coverage
Answer these questions:
- Does this program address risks that have emerged in the last three years? (Examples: AI-related professional liability, cyber accumulation from cloud provider failures, geopolitical risk in aviation or marine)
- If not, what coverage gaps exist for risks our organization now faces but didn't when we designed this program?
- What would it cost to address those gaps through new structures?
Guidance: If you operate in sectors exposed to geopolitical aggregation (aviation, marine, trade credit, political risk), document whether your program contemplates multi-event scenarios.
Section 6: Relationship and Service Quality Metrics
Rate your reinsurer(s) on:
- Claims payment speed and dispute frequency
- Quality of communication during the underwriting process
- Willingness to discuss program modifications mid-term when exposures change
- Technical expertise in your industry or risk class
- Stability of the relationship (how many years with this reinsurer, turnover in their underwriting team)
Guidance: In a market where capacity is abundant, reinsurers must demonstrate value through selective capacity deployment and a genuine understanding of client needs. If your reinsurer treats you as a commodity account, that's a quantifiable risk to program continuity.
How to Customize It
Adjust Section 2 based on your organization's risk appetite documentation. If your board has approved specific retention limits or PML thresholds, reference those explicitly. This ties the reinsurance program to governance decisions rather than underwriting preferences.
In Section 3, work with your CFO or treasurer to get the actual cost of capital figure your organization uses. If you don't have one, use your weighted average cost of capital (WACC) as a proxy.
For Section 4, interview your claims team and risk engineering contacts. They often know about reinsurer-provided services that don't appear in the treaty wording but represent real value.
Section 5 requires updating annually. New liability classes emerge constantly. If your program hasn't been updated to reflect new exposures, document that gap.
Validation Steps
Once you've completed the template, run these checks:
Check 1: Does every treaty have a clear risk transfer justification?
If you cannot articulate what specific scenario or loss event the coverage addresses, either the structure is not justified or you need more information from your broker.
Check 2: Does the capital efficiency analysis show positive value?
Add up the capital relief benefit (freed-up capital × cost of capital) across all treaties. Compare that to total program cost. If the capital benefit alone doesn't cover a significant portion of premium, your program's value depends entirely on risk transfer. That's fine, but you need to be explicit about it.
Check 3: Can you defend this program to someone who doesn't understand reinsurance?
Read Section 2 aloud. If it sounds like insurance jargon rather than a clear explanation of what risk you're managing, rewrite it. Your CFO should be able to understand why each treaty exists without needing a broker to translate.
Check 4: Have you identified coverage gaps?
Section 5 should list at least one emerging risk that your current program does not fully address. If it doesn't, you're either in a uniquely stable risk environment or you haven't looked hard enough.
Check 5: Are you measuring reinsurer performance?
Section 6 should contain specific examples, not generalities. "Good claims service" means nothing. "Paid our $8M claim within 45 days with no coverage dispute" is a measurable outcome.
Use this completed template when your broker presents renewal options. If a reinsurer proposes a 15% rate reduction but scores poorly in Section 6, you can quantify the relationship risk you're taking on. If another reinsurer costs 5% more but offers structured solutions that address gaps in Section 5, you have a framework for justifying that cost.
The market has shifted. The most successful reinsurers will embrace innovation and work collaboratively with clients to solve increasingly complex risk challenges. This template helps you identify which reinsurers are actually doing that and which are just offering cheaper capacity you may not need.
