Services Commutations

There may be many reasons why a party to a reinsurance contract would wish to commute the relationship rather than run it off to natural expiry. These could include a desire to fix liabilities, a contractual dispute or concerns about security. In order to achieve the best price, further knowledge of the exposure is required. Chiltington's research skills can allow this. Thereafter negotiation skills are needed and here our experience in providing solutions comes to the fore.

Commutation of inward reinsurance
Commutation strategy, quantification and negotiation have long been strengths of Chiltington. We recommend Commutation as part of a Run-Off Strategy, to crystallise exposure and compromise disputes.

Commutation of outwards reinsurance
Outwards Commutation serves both a credit control function, as a means of simplifying compromise of inwards liability and of reducing administration. We provide all functions needed to achieve successful Commutation, from evaluation, quantification, and analysis to negotiation.

Establishing a commutation strategy
Chiltington takes over responsibility for a (selected) portfolio in order to structure and organise Commutations on behalf of a client. This can involve discontinued lines for a live operation or one in Run-Off.

Chiltington can assist in the creation of a Commutation Strategy. This will involve reconciliation of the contracts to be commuted and outstanding / unpaid positions. On behalf of our client, we will then negotiate with the counter party (reinsurer or cedant) and seek commuted discounts based on factors such as the nature of the book to be commuted, the solvency of the reinsurers and any issues that may have been uncovered through a prior inspection.