Week 4 Essay question Flashcards
What is essay 4 and where is it?
The role of reinsurance in worldwide risk spreading and is at Gemmas house
What do you talk about in essay 4?
Intro
what is reinsurance
(Avoid huge losses, financial stability, connected via brokers, they can also use congruent currency hedging)
Types of reinsurance
(proportional- Quota share and surplus share, Non-proportional- Stop loss and excess of loss)
Global sharing and benefits
(talk about how they help smaller locals with catastrophic and becoming solvent
Benefits of reinsurance—
risk diversification, capacity building and expertise and financial stability)
Challenges in reinsurance
(negotiation conflicts, catastrophic risks and systemic risks)
Conclusion
Reinsurance benefits is part of what paragraph?
Global sharing and benefits is on top with the explanation of the smaller locals then its benefits of reinsurance.
Global risk sharing what might you talk about?
That reinsurers and international, and help insurance catastrophic events, they also help smaller local insurance companies from becoming solvent due to correlated losses.
then in benefits of reinsurance
(risk diversification, capacity building as they underwrite more policies and tend to have larger funds and can add capacity to others giving financial stability in insurance as well as providing expert knowledge you can also talk about relative frequency of occurrence and there past data or historical data they may have)
When talking about avoiding huge losses what might you talk about?
Spreading the risk which can be in a significant proportion of premiums to claims payout and that with reinsurance you can have a more tailored insurer for you whether that’s 90% or 20% of losses you or they pay out.
When talking about reinsurance benefits what might you talk about in risk diversification?
Due to the global nature of reinsurers, the risk can be spread which may occur from a natural disaster, they can help balance a smaller insruance companies high to low risk policies as well as reducing the loss from bigger claims.
What might you talk about in capacity building? (3)
Capacity building can allow insurers to increase their risk that they take due to the backing of reinsurance, as well as entering new markets where they are unsure of the risk and how to assess how much risk they want and are willing to take as well as encoraging insurance innovation to try new things.
