Reinsurance

Question 1

What measure is reinsureanfor an insurer?

Answer 1

Techinical risk management

Question 2

What does reinsurance allow?

Answer 2

Insurers to take on bigger risks

Question 3

Direct reinsurance

Answer 3

An insurer insures clients then the primary insurer transfers the risk

Question 4

What is another name for a reinsurer?

Answer 4

Seeding company or cedent

Question 5

What can a primary insurer transfer (3)

Answer 5

• Part of a single risk
• Part of the risks of certain types
• Parts of the total risk balancing

Question 6

Direct business

Answer 6

The insurance contract between the policyholder and the primary insurer

Question 7

Retrocession

Answer 7

The reinsurer transfers risk to another reinsurer

Question 8

What are the benefits of retrocession

Answer 8

Insurers can underwrite very big risks

Question 9

Co-insurance

Answer 9

2 or more direct insurers that each hold a part of the risk

Question 10

Who is the contracting partners in an insurance agreement with the policyholder?

Answer 10

The policyholder and primary insurer. The policyholder can not claim off a reinsurer

Question 11

Factitive reinsurance

Answer 11

Primary insurer decides whether to take on a risk or not and the reinsurer decides whether to not to assume the risk if it is offered.

Question 12

Obligatory reinsurance

Answer 12

Reinsure must accept the primary insurers risks

Question 13

Semi obligatory reinsurance

Answer 13

Primary insurers can choose to submit risks to the reinsurer who is bound to assume them

Question 14

What type of cover is semi obligatory reinsurance?

Answer 14

Open cover

Question 15

Factitive-obligatory reinsurance

Answer 15

The direct insurer can underwrite certain types of business and the reinsure will cover the risks in that business line

Question 16

Proportional reinsurance

Answer 16

The sums insured are divided among the primary insurer and the reinsurer

Question 17

Surplus line reinsurance

Answer 17

Covers any amount up the line

Question 18

What are the forms of non-proportional reinsurance (3)

Answer 18

Excess loss (risk basis), excess loss on occurrence, stop loss,

Question 19

Excess loss reinsurance on a risk basis

Answer 19

Reinsurance offers cover for all losses from a single risk above a certain amount

Question 20

Reinsurance amount

Answer 20

The total amount the reinsurer will pay is not the limit of when they stop paying

Question 21

Excess loss reinsurance on occurance baisis

Answer 21

The reinsurer covers the combined losses above a certain limit

Question 22

Occurrence basis

Answer 22

In combination

Question 23

Umbrella cover

Answer 23

An excess loss reinsurance on occurrence that has more than one line

Question 24

Example of umbrella cover

Answer 24

Reinsurance covers wind storm loss across life and property insurance

Question 25

Excess loss ratio/stop-loss reinsurance

Answer 25

Offers the ceding company protection against aggregated losses of a portfolio - sets the maximum loss of the portfolio

Question 26

How do reinsurance premiums differ to consumer premiums?

Answer 26

Only the upper part of the risk is transferred, there is a much lower risk of this and hens a different premium