[OR] [MLRE] [E3] [CBS] [1] [ITo] Establish Impact Tolerances

CBS-1 Reinsurance Underwriting & Pricing

Introduction

Reinsurance underwriting and pricing sit at the core of Malaysian Life Reinsurance’s mandate to provide sustainable risk transfer capacity to the Malaysian insurance and takaful industry.

As a Critical Business Service (CBS-1), any disruption to underwriting and pricing activities can have far-reaching implications on cedants’ solvency positions, policyholder protection, market confidence, and MLRe’s own financial resilience.

Establishing clear and realistic impact tolerances ensures that MLRe can continue to deliver fair, timely, and compliant underwriting outcomes even under severe but plausible disruption scenarios.

In line with the 2025 BNM Discussion Paper on Operational Resilience, impact tolerance is not about preventing disruptions entirely, but about defining the maximum level of disruption MLRe is willing to tolerate before causing intolerable harm to customers, breaching regulatory obligations, or undermining financial stability.

This chapter sets out impact tolerances for each detailed process within CBS-1, translating regulatory expectations into actionable recovery objectives across time, data integrity, governance, and decision-making.

Table P4: Establish Impact Tolerance for CBS-1

Sub-CBS Code	Sub-CBS	Maximum Tolerable Downtime (MTD)	Maximum Tolerable Data Loss (MTDL)	Customer Impact	Regulatory Impact	Impact Type	Current Resilience Status	Action Required
1.1	Risk Appetite & Strategy Setting	5 business days	No data loss	Misalignment of underwriting decisions with risk capacity	Governance and board oversight concerns	Strategic / Financial	Partially Resilient	Formalise alternate decision forums and documented contingencies
1.2	Data Acquisition & Validation	24 hours	≤ 4 hours	Delays or inaccuracies in pricing assumptions	Data quality and model risk concerns	Data / Operational	Moderately Resilient	Enhance automated validation and data reconciliation controls
1.3	Risk Modelling & Pricing Analytics	48 hours	≤ 4 hours	Incorrect or delayed premium quotations	Model governance and prudential risk	Financial / Model Risk	Partially Resilient	Strengthen model redundancy and stress-testing capabilities
1.4	Underwriting Submission Intake	24 hours	≤ 2 hours	Cedant submission delays and service dissatisfaction	Conduct and fair treatment risks	Customer / Operational	Largely Resilient	Improve workflow failover and manual intake procedures
1.5	Underwriting Risk Assessment	48 hours	≤ 4 hours	Sub-optimal risk selection or delayed decisions	Prudential underwriting expectations	Financial / Prudential	Moderately Resilient	Cross-train underwriters and formalise backup assessment processes
1.6	Pricing & Quotation Formulation	48 hours	≤ 4 hours	Delayed treaty or facultative placement	Market conduct and competitiveness	Financial / Customer	Partially Resilient	Introduce pre-approved pricing bands for disruption scenarios
1.7	Regulatory & Compliance Review	72 hours	No data loss	Potential issuance delays	Non-compliance with BNM and regulatory standards	Regulatory / Compliance	Largely Resilient	Maintain compliance playbooks and alternate sign-off authority
1.8	Decision Governance & Approval	72 hours	No data loss	Slower turnaround for cedants	Governance and accountability gaps	Governance	Partially Resilient	Enable remote quorum and digital approval mechanisms
1.9	Documentation & Contract Issuance	48 hours	≤ 2 hours	Coverage uncertainty for cedants	Legal enforceability concerns	Legal / Operational	Moderately Resilient	Enhance document automation and contract version control
1.10	Portfolio Monitoring & Experience Analysis	5 business days	≤ 24 hours	Delayed portfolio insights	Capital adequacy and risk monitoring gaps	Financial / Strategic	Partially Resilient	Improve data pipelines and near-real-time dashboards
1.11	Exception & Escalation Handling	24 hours	No data loss	Prolonged unresolved underwriting issues	Governance and conduct risks	Governance / Operational	Moderately Resilient	Define clear escalation triggers and crisis decision owners
1.12	Reporting & Feedback Loop	5 business days	≤ 24 hours	Reduced service improvement responsiveness	Supervisory reporting quality concerns	Regulatory / Strategic	Largely Resilient	Integrate feedback loops into resilience metrics reporting

The impact tolerances defined for CBS-1 Reinsurance Underwriting & Pricing provide Malaysian Life Reinsurance with a clear, regulator-aligned view of what constitutes intolerable harm across its underwriting value chain.

Consistent with the BNM 2025 Discussion Paper, these tolerances focus on safeguarding cedants, preserving prudential soundness, and ensuring that governance and decision-making remain effective during disruptions—not merely restoring systems quickly.

By applying differentiated tolerances across strategic, data-driven, analytical, and governance processes, MLRe can prioritise investments in resilience where failure would most threaten market confidence or regulatory compliance.

Going forward, these tolerances should be continuously validated through scenario testing, severe-but-plausible disruption exercises, and board-level reviews, ensuring that underwriting resilience evolves in step with MLRe’s risk profile and the expectations of Bank Negara Malaysia.

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CBS-1 Reinsurance Underwriting & Pricing
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For organisations looking to accelerate their journey, BCM Institute’s training and certification programs, including the OR-5000 Operational Resilience Expert Implementer course, provide in-depth insights and practical toolkits for effectively embedding this model.

More Information About OR-5000 [OR-5] or OR-300 [OR-3]

To learn more about the course and schedule, click the buttons below for the OR-300 Operational Resilience Implementer course and the OR-5000 Operational Resilience Expert Implementer course.



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Building Organisational Resilience: An Operational Resilience Guide for Malaysian Life Reinsurance

[OR] [MLRE] [E3] [CBS] [1] [ITo] Establish Impact Tolerances

Operational Resilience Certified Planner-Specialist-Expert

CBS-1 Reinsurance Underwriting & Pricing

Introduction

Table P4: Establish Impact Tolerance for CBS-1

More Information About OR-5000 [OR-5] or OR-300 [OR-3]

Comments:

Building Organisational Resilience: An Operational Resilience Guide for Malaysian Life Reinsurance

[OR] [MLRE] [E3] [CBS] [1] [ITo] Establish Impact Tolerances

Operational Resilience Certified Planner-Specialist-Expert

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Introduction

Table P4: Establish Impact Tolerance for CBS-1

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More Information About OR-5000 [OR-5] or OR-300 [OR-3]

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CBS-1 Reinsurance Underwriting & Pricing