Chapter 29 : Reinsurance (1) Flashcards
What is original terms reinsurance?
This method of reinsurance involves sharing of all aspects of the original contract.
Reinsurance commission is significant and determines the price of the reinsurance
What is level risk premium reinsurance (co-insurance)
The reinsurer sets a level premium rate. The insurer prices contract taking this into account. The reinsurance commission in this tends to be lower than original term approach
What is risk premium reinsurance?
Reinsurer sets premium rate. Risk premiums change from year to year. May or may not be guaranteed for for the policy duration
What is XOL catastrophe reinsurance?
Covers non-independent risks e.g. group life.
Shares in total claims above a threshold from multiple claims from a single event. Renewable annually
Exclusions: War,epidemics and nuclear risks these would have their own seperate cat insurance
What is XOL stop loss reinsurance
Covers excess of all aggregate claims in a year over a threshold, up to a maximum
What is financial reinsurance
Transfer of financial risk from the cedant to the reinsurer. Loan contingent on the future profit. Improving the solvency position of the company
The is risk premium and contingent loan fin Re
What is facultative and obligatory reinsurance
Facultative = cedant is free to place reinsurance with any reinsurer. However reinsurance can accept or reject, they are not obligated.
What is the aim of catastrophe reinsurance
To reduce the potential loss to the cedant due to any non-independence of the risks insured.
