LO 5: Understand reinsurance within the insurance market Flashcards
reinsurance
insurance for insurers
- length of the chain is limited by supply and demand
- not a legal requirement but seen as good practice
- doesnt absolve the insurer of the responsibility to pay claims
insurers insurable interest?
arises from the financial risks insurers have taken on by insuring
subscription market
more than one insurer usually shares each risk
types of resinsurance covering
- single risk (fac)
- certain class
- entire portfolio
- catastrophe losses
reinsurance benefits
- increased capacity
- smoothing peaks and troughs (stability in trading results)
- allows diversification into new classes of business
- protecting the portfolio
benefits of writing/selling reinsurance
- accessing other geographical areas
- accessing other classes of business
paid up capital
money received from share holders
- ususaly a lot for reinsurers unless they operate in a specifc class of business
types of reinsurers
- specialists that dont write direct insurance
- lloyds syndicates
- insurers that write reinsurance as well
reinsureds
insurance companies
captive insurers
mutuals
other reinsurers
main reinsurance markets
- london
- bermuda
- us
- europe
bordereaux
spreadsheet on risk and claims data thats given to the reinsurer
to cede
sharing risk with reinsurer
cedant
reinsured
cession
the amount of risk given to reinsurer
collecting note
used to present risk to reinsurer XoL
