Getting Rid of the Schedule F Headache
The NAIC Schedule F is how a US insurance company reports its reinsurance transactions on a statutory basis. Schedule F is required to be filed for all states in which you write business. Companies must use their domicile state’s reinsurance company authorization classification. Treasury Schedule F is required if you write or reinsure federal surety bonds.
Filling out the schedule can be extremely time consuming and complicated. The NAIC revises the Schedule on a regular basis making it harder to keep up with and to automate in any way. Schedule F covers both assumed and ceded reinsurance transactions.
Schedule F is a very important part of an insurance company’s overall accounting procedures. Reinsurance is the largest asset on many insurers’ balance sheets and is of upmost importance when monitoring a company’s financial strength.
These are the types of information that needs to be captured and reported: Assumed Reinsurance, Portfolio Reinsurance, Ceded Reinsurance, Aging of Ceded Reinsurance, Provision for Unauthorized Reinsurance, Provision for Overdue Authorized Reinsurance, Provision for Overdue Reinsurance, Balance Sheet Restatement. Last year, the NAIC adopted revisions to the Credit for Reinsurance Model Law #785 and the Credit for Reinsurance Model Regulation #786, which deem that each state will determine which reinsurers are certified. This adds lot of new data capture requirements and complexity.
These model revisions will act to reduce reinsurance collateral requirements for reinsurers meeting certain criteria for financial strength and business practices that are domiciled in qualified jurisdictions. Under the revisions, credit is allowed to a domestic ceding insurer for reinsurance ceded to a new class of assuming insurers, certified reinsurers. As a result, it is necessary to consider revisions to the appropriate reinsurance schedules and instructions in order to collect the relevant information with respect to these reinsurance transactions. This adds a new level of complexity.
What to do? Schedule F preparation is a painstaking effort if done manually. Anyone who has ever prepared a Schedule F knows how complex and time consuming it is. Most people don’t realize that you don’t need to give up your weekends in January and February anymore. There are reinsurance systems in the marketplace today that handle all the assumed and ceded administration of reinsurance for you, including the complete preparation of Schedule F. These systems also accommodate yearly changes, keeping you updated without the headache. Just one click and you really can be ready to review, sleep in and enjoy your coffee without worry.