“I can’t imagine performing cost recovery audits without ACL technology. Once we have our client’s information, we have the flexibility to analyse and test the data in every way possible. I used to work with another data analysis program, but it took at least 10 steps to do what we can accomplish in one simple function with ACL.”
Paul Grace, Reinsurance Auditor, Hannover Life Reassurance Company of America
As the North American subsidiary of the world’s fifth largest reinsurance group, Hannover Life Reassurance Company of America (HLR America) handles millions of dollars each year in life and health reinsurance contracts. The HLR America audit department chose ACL technology to perform highly detailed cost recovery audits to ensure that client information matches the contractual terms of each reinsurance agreement. With its innovative data analysis capabilities, ACL gives HLR America’s auditors the ability to manage risk, identify costly overpayments, and enjoy the business assurance that comes with full data coverage. The results included the identification of over £6 million in overpayments over a three-year period.
Hannover Life Reassurance Company of America, headquartered in Orlando, Florida, is a leading specialty reinsurer in the U.S. life and health insurance market. Its parent company, Hannover Re Group, with £9.6 billion in annual premiums, transacts all lines of property/casualty, life/health, and financial/finite risk reinsurance and maintains business relations with more than 3,000 insurance companies in over 150 countries.
With millions of dollars changing hands on a monthly basis, HLR America needed a way to verify that clients’ reinsurance reporting was accurate, complete, and in compliance with the terms of their reinsurance agreements. One major obstacle was that many clients supplied only paper copies of their reinsurance reports, representing thousands of transactions. For the clients that did supply electronic report data, the information was extracted from various systems and provided in differing file types and formats. HLR America needed an efficient means to perform detailed analysis of large amounts of diverse transactional data.
Also, HLR America needed a continuous monitoring capability to ensure the company was in compliance with its own corporate risk retention policy. As a subsidiary, HLR America is mandated by its parent company to only retain a specific level of risk for each insured life. The procedure to identify these instances needed to be independent of HLR America’s administrative system and allow the flexibility for these tests to be performed in many different ways.
By choosing ACL software as its primary data analysis technology, HLR America can now take a “bottom-up” approach to monitoring its accounts, performing detailed analysis of individual premium, claim, and expense transactions. ACL’s audit analytics allow HLR America auditors to read and analyse virtually any type of file format, leaving clients free to provide various requested information in whatever format is most convenient.
HLR America’s auditors can go behind reported figures to drill down into the data, therefore allowing them to achieve 100 percent visibility into the individual transactions. In one instance, HLR America’s management asked its auditors to analyse rising managed care expenses reported by one of its clients. In a matter of days, auditors identified more than £303,000 in overpayments – a number that eventually grew to over £900,000. During the three-year period since HLR America started using ACL software, HLR America has identified and collected a total of over £6 million in net overpayments. In addition, HLR America has also used ACL to pinpoint underpayments or refunds due to its clients.
ACL technology is being used by HLR America to continuously monitor the company’s own risk exposure. Working closely with the administration department staff, HLR America’s auditors can easily download an entire database, consisting of over 700,000 client records. This allows HLR America to identify possible exceptions, gain assurances the system controls are operating as intended, and ensure the company’s business operations are in compliance with corporate risk retention policies.
The HLR America audit department uses ACL technology to: