Chapter 7 Key Points

Question 1

uses for catastrophe modelling

Answer 1

planning and forecasting
reserving
capital assessment and allocation
designing and arranging reinsurance protection

Question 2

what does catastrophe modelling enable allowances for

Answer 2

changing frequencies of events over time
changing severity of impact of events
changes in portfolio

Question 3

what does reinsurance do

Answer 3

provides protection against unexpected losses
maintains financial stability
provides capacity
protects against catastrophes

Question 4

two types of reinsurance arrangements

Answer 4

facultative
treaty

Question 5

two principal ways of providing reinsurance

Answer 5

proportional
non proportional

(both facultative and treaty can be written on either basis)

Question 6

two main types of proportional reinsurance

Answer 6

quota share
surplus

Question 7

how does non proportional reinsurance work

Answer 7

reinsurer agrees to pay an amount in excess of the insurer’s chosen retention

Question 8

two main types of non proportional reinsurance

Answer 8

excess of loss
stop loss

Question 9

what is catastrophe excess of loss

Answer 9

type of non-proportional reinsurance
provides specific protection against aggregations from one identified event

Question 10

what does catastrophe excess of loss assess the impact of

Answer 10

each and every loss occurrence to the reinsurance contract

Question 11

what does risk excess of loss assess the impact of

Answer 11

each and every risk to the reinsurance contract