Managing exposure Flashcards
Market Cycle
The process involving higher capacity, lower prices, lower profits, withdrawal of capacity, higher prices, and higher profits, which repeats.
Softening Market
When rates are reducing, indicating a softer insurance market.
Hardening Market
When rates are increasing, indicating a harder insurance market.
Risk Accumulation
The accumulation of risk, especially in cases where claims can aggregate from a single event.
Single Risks
Risks associated with individual losses such as property or business interruption.
Liability Risks
Risks based on a limit of liability, often handled with layered coverage for higher limits.
Single Events
Catastrophic events that impact multiple policies across various classes of business.
Reinsurance
An agreement where insurers share the risks of claims with another insurer to mitigate loss exposure.
Quota Share
A type of proportional reinsurance where a fixed percentage of all risks is ceded to a reinsurer.
Surplus Reinsurance
Proportional reinsurance where the insurer cedes risks exceeding its own retention limit.
Excess of Loss
Non-proportional reinsurance where a reinsurer covers losses above a specified limit (per event or per risk basis)
Stop Loss
A type of reinsurance that protects against losses that would exceed a specific ratio, such as a loss ratio limit.
Proportional reinsurance
Reinsurer accepts to an agreed share of the risk to be ceded and pays any loss on the same basis
Split into quota share and surplus
Non-proportional reinsurance
Reinsurer agrees to an contribute to losses exceeding a specified figure
