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A reinsurance broker acts as an intermediary between insurance companies seeking to transfer risk and reinsurers who provide that coverage, facilitating negotiations and placements. In contrast, a reinsurer is a company that assumes the risk from insurers, providing them with financial protection against large claims. While brokers focus on finding the best terms and conditions for their clients, reinsurers evaluate and accept the risk to build their own portfolios. Thus, their roles in the reinsurance market are distinct yet complementary.
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What is a reinsurance credit?
Reinsurance credit refers to the financial benefit that an insurance company can recognize on its balance sheet from reinsurance arrangements. When an insurer cedes some of its risk to a reinsurer, it can count on the reinsurer's financial strength to support its liabilities. This credit helps insurers manage their capital requirements and improve their solvency ratios, as it reflects the potential recovery from the reinsurer in the event of claims. However, the credit is contingent upon the reinsurer's ability to fulfill its obligations.
Can a broker be both a broker and reinsurance broker?
Are you pertaining to being both a direct insurance and reinsurance broker at the same time? It probably depends on the Insurance Laws in your country. In the Philippines, you can be both a direct insurance and reinsurance broker. There's just a higher paid-up capital required for the composite license.
What is portfolio transfer in reinsurance?
Portfolio transfer in reinsurance refers to the process where an insurer transfers a block of its insurance policies, along with the associated risks and liabilities, to a reinsurer. This can be done to reduce risk exposure, improve capital management, or enhance solvency ratios. The reinsurer assumes the responsibilities for claims and premiums related to the transferred portfolio, allowing the original insurer to focus on its core business operations. Portfolio transfers can be executed through various methods, including quota share agreements or excess of loss arrangements.
What are the reasons for government intervention in reinsurance?
The government regulates reinsurance for the same reasons it regulates most insurance: to protect consumers. Government itself can become a reinsurer where the potential for large losses (while unlikely) is too great for an insurer to reasonably risk. The reinsurance by a government entity does not spread local risks throughout the insurance markets, as does private reinsurance. A good example is the US Flood Insurance offered in many areas. This fills the gap between private insurance and the actual risk faced from catastrophic flooding.
Does gwp gross written premiums include taxes?
Gross Written Premium includes commissions (to broker/agents) and reinsurance. But it excludes insurance premium tax.
Facultative reinsurance and coinsurance?
Facultative reinsurance is a form of reinsurance in which the terms, conditions, and reinsurance premium is individually negotiated between the insurer and the reinsurer. There is no obligation on the reinsurer to accept the risk or on the insurer to reinsure it if it is not considered necessary. The main differences between facultative reinsurance and coinsurance is that the policyholder has no indication that reinsurance has been arranged. In coinsurance, the coinsurers and the proportion of the risk they are covering are shown on the policy schedule. Also, coinsurance involves the splitting of the premium charged to the policyholder between the coinsurers, whereas the reinsurers charge entirely separate reinsurance premiums. Regards, Tamer Haddadin
What is a reinsurance credit?
Reinsurance credit refers to the financial benefit that an insurance company can recognize on its balance sheet from reinsurance arrangements. When an insurer cedes some of its risk to a reinsurer, it can count on the reinsurer's financial strength to support its liabilities. This credit helps insurers manage their capital requirements and improve their solvency ratios, as it reflects the potential recovery from the reinsurer in the event of claims. However, the credit is contingent upon the reinsurer's ability to fulfill its obligations.
Who are the buyers of reinsurance?
*Direct insurance company *Captive insurance company *Reinsurer However, there are no clear separation between buyers and sellers in reinsurance. Insurance company maybe a buyer (outward reinsurance) and a seller (inward reinsurance)
What is the difference between facultative reinsurance and quota shares?
Facultative reinsurance is a type of reinsurance agreement where the insurer has the option to cede individual risks to the reinsurer on a case-by-case basis, allowing for tailored coverage for specific policies. In contrast, quota share reinsurance is a proportional reinsurance arrangement where the ceding insurer and reinsurer share premiums and losses for a predetermined percentage of all policies within a specified category. Essentially, facultative reinsurance is selective and specific, while quota share is automatic and applies broadly to a defined set of risks.
Name of the reinsurance companies in India?
General Insurance corporation of India, ( GIC Re) a company fully owned by Government of India and set up under an Act of Parliament in 1972 is the National reinsurer. No other reinsurer has obtained a license from Indian regulator to do reinsurance business in India. Overseas reinsurers either operate through their representative offices or through reinsurance intermediaries.
Can a broker be both a broker and reinsurance broker?
Are you pertaining to being both a direct insurance and reinsurance broker at the same time? It probably depends on the Insurance Laws in your country. In the Philippines, you can be both a direct insurance and reinsurance broker. There's just a higher paid-up capital required for the composite license.
What is the difference between facultative and treaty reinsurance?
With Facilitative Reinsurance, individual risks are offered by a ceding insurer for acceptance or rejection by the reinsurer. With Treaty Reinsurance, the reinsurer and ceding (or offering) insurer have agreed that a specified portion of the type or category of risk as specified in the reinsurance treaty will be ceded (or offered) by the insurer and accepted by the reinsurer. Fac covers an individual risk, treaty covers a group of risks.
What are the advantages of quota share reinsurance?
there is no selection against reinsurer since he get a mix of both good and bad business ,hence the reinsurer will attain a balanced port folio with and predictable results .consequently low costsimple to administer
What factors are considered by insurance companies when choosing a reinsurance program?
Generally speaking, the following factors are considered important among insurers when considering potential reinsurance partners; (i) the financial security/solvency of the reinsurer, (ii) the third-party rating of the reinsurer, (iii) the reinsurer's reputation and history of willingness to pay claims in a complete and timely fashion, (iv) the reinsurer's reputation and history of willingness to resolve disputes in a fair, timely and cost-efficient manner, (v) the price (as measured in Rate-On-Line) of the reinsurance product, (vi) the breadth and potential cost of items excluded from coverage, (vii) the reinsurer's willingness to develop bespoke solutions for its client's risk management needs. This is not meant to be an exhaustive list, and other factors may be considered as well.
What is meant by quota share treaty reinsurance?
Quota Share reinsurance is a type of pro rata reinsurance in which the primary insurer and the reinsurer share the amounts of insurance, policy premiums and losses (including loss adjustment expenses) using a fixed percentage. Quota Share reinsurance can be used for both property and liability insurance but is more frequently used in property insurance.
What is reinsurance broker?
No such profession. There are only insurance brokers. These will handle renewal of insurance.
What is surplus reisurrance?
Surplus reinsurance is a type of reinsurance arrangement where a reinsurer agrees to cover losses that exceed a specified amount, known as the retention limit, for a primary insurer. This arrangement allows the primary insurer to manage its risk exposure by transferring portions of its potential losses to the reinsurer. It is typically used for large or catastrophic risks, providing financial protection and stability for the insurer. In essence, surplus reinsurance helps insurers maintain solvency and underwriting capacity while protecting against significant claims.
