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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 supi in reinsurance?
In reinsurance, "supi" refers to a "superior underwriting profit index," which is a metric used to evaluate the performance of a reinsurer's underwriting activities. It assesses the profitability of underwriting operations by comparing the premiums earned against the losses incurred and expenses associated with those policies. A higher supi indicates better underwriting performance and efficiency, making it a key indicator for reinsurers and their stakeholders.
What is a captive insurance company?
Company formed to insure the risks of its parent corporation. Reasons for forming a captive insurance company include:1. Instances when insurance cannot be purchased from commercial insurance companies for a business risk. In many instances companies within an industry form a joint captive insurance company for that reason.2. Premiums paid to a captive insurance company may be deductible as a business expense for tax purposes according to current Internal Revenue Service rules. However, sums set aside in a self insurance program are not deductible as a business expense. Therefore, although costs will be insurred in creating and operating a captive, they may be rouped over time by tax savings.3. Reinsurance can be obtained through the international reinsurance market. Reinsurance is essentially insurance for an insurer, and therefore, the captive does not have to bear the entire risk of loss if it has an established reinsurance program. While premiums must be paid for reinsurance, the structure of the reinsurance program can be layered to keep premiums relatively low in comparison to the amount of protection provided against catastropic losses. In contrast, self-insurance programs, because they are not insurers as such, cannot obtain reinsurance, and thereby must retain all risk.4. Investment returns can be obtained directly on its invested capital.However, competent personnel to manage and staff the company can be costly; and further, a catastrophic occurrence or series of occurrences could bankrupt the captive-which is why reinsurance through a stable reinsurer is critical.
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.
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 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.
How does the deductible work in excess of loss reinsurance?
In excess of loss reinsurance, the deductible represents the amount that the primary insurer must pay out of pocket before the reinsurer becomes liable for any losses. This deductible is typically set at a specific dollar amount or a percentage of the loss and is designed to protect the reinsurer from minor claims. Once losses exceed this deductible, the reinsurer covers the excess up to a predetermined limit, providing financial protection to the insurer against large claims. This structure helps manage risk and ensures that the primary insurer retains some exposure.
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.
What is the Loss recovery clause in the reinsurance slip?
The Loss Recovery Clause in a reinsurance slip outlines the conditions under which a reinsurer will cover losses incurred by the cedent (the primary insurer). It specifies the process for claiming recovery, including documentation requirements and timelines. This clause ensures that both parties have a clear understanding of their responsibilities in the event of a loss, facilitating smoother transactions and financial stability. Overall, it serves to protect the interests of both the cedent and the reinsurer during loss events.
What are the differences Reinsurance Broker and Reinsurer?
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.
What is quota share agreement?
A quota share agreement is a type of reinsurance arrangement where the reinsurer agrees to accept a fixed percentage of all premiums and losses from the ceding insurer's policies. This means that both the insurer and reinsurer share the risks and rewards in proportion to the agreed percentage. It helps insurers manage their risk exposure while providing reinsurers with a steady stream of premium income. This arrangement is commonly used to stabilize the insurer's financial performance and enhance capacity for underwriting new business.
Where does an insurance company invest its fund?
Insurance companies do invest there money in following ways, and they are: 1. Reinsurance in reinsurer for safety, 2. Governmant sector ( Traditional policies) and 3. Mutual funds(ULIP policies).
What is follow the actions clause in reinsurance?
"Follow-the-fortunes" is a fundamental doctrine of reinsurance which provides generally that a reinsurer must follow the underwriting fortunes of its cedant (reinsured) and is thus bound by the claims-handling decisions of its reinsured, provided there is no evidence of fraud, collusion with the insured, or bad faith. It is a burden-shifting doctrine which allows the cedant (reinsured) the freedom of making good-faith claims decisions without the fear of having to relitigate those decisions with its reinsurer. This term is used inter-changeably with "follow-the settlements".
What is a cessionary?
CessionGenerically, the term refers to the formal giving up of rights, property, or territory. With respect to insurance, the term "cession" is used most commonly in the context of reinsurance. In that context, a primary insurer is said to "cede" a portion of its direct risk (assumed from policyholders) to a reinsurer, in return for a reinsurance premium. In essence, the reinsurer is acting as the insurer for the insurer as to the business that is ceded.
