The main hold’
Base storage net amount of risk or liability arising from the insurance policy or policies that continue to make concessions after the amount of the balance risk or obligation. The degree of underlying retention will depend on the assessment of the ceding company about the risks associated with lien obligations, policies and the profitability of the insurance policy.
Breaking down the Underlying retention’
Base retention allows the insurer to avoid payment of reinsurance premiums. The insurer usually retains the most profitable strategies or low risk components, insuring less profitable, high risk policy. Reinsurance, also known as insurance of insurers or stop-loss insurance is the practice of insurers transferring parts of the risk portfolio to other parties by some form of agreement to reduce the likelihood to pay a large obligation resulting from an insurance reimbursement. The party that diversifitsirovat its insurance portfolio is known as a concession of the party. A party which takes a share of the potential obligation in exchange for a share of the insurance premium, called the reinsurer.
Reinsurance allows insurers to remain solvent, restoring some or all of the sums paid to plaintiffs. Reinsurance reduces the amount of liabilities on separate risks and protection from disaster large or multiple losses. It also provides ceding companies with the possibility to increase their underwriting capabilities in the number and size of risks.
Coverage by the insurer against accumulated individual commitments, reinsurance provides the insurer greater security for its equity and solvency, and stable results when unusual and major events. Insurers may insure policy covering a larger number or volume of risks without excessive administrative costs to cover its solvency margin. In addition, reinsurance significant liquid assets available to insurers in the event of exceptional losses.
Types of reinsurance
Optional coating protects the insurer to the individual or a specific risk or contract. If you need a few risks or reinsurance contracts, each negotiated separately. The reinsurer has all rights on accepting or rejecting offers facultative reinsurance.
The reinsurance agreement is effective for a period of time, and not on risk or on a contract basis. The reinsurer covers all or part of the risks which the insurer may incur.
Under proportional reinsurance, the reinsurer receives a proportionate share of all insurance premiums sold by the insurer. When claims are made, the reinsurer bears part of the losses based on a pre-agreed percentage. The reinsurer shall also reimburse the insurer for processing, business acquisition, and worth writing.
With non-proportional reinsurance, the reinsurer is liable if insurer losses exceed a specified amount, known as a priority or a storage life. As a result, a reinsurer does not have a proportionate share in the premiums and losses of the insurer. Priority or a storage period may be based on one type of risk or a risk category.
Excess-of-loss reinsurance is a form of non-proportional insurance in which the reinsurer covers losses that exceed the retained limit of the insurer. The Treaty generally applies for catastrophic events covering the insurer, or on the occurrence or aggregate losses for a certain period of time.
Under the risk-attaching reinsurance, all of the requirements established during the period covered, regardless of the losses occurred outside the period of insurance. Coverage is not provided for claims occurring outside the term of the contract, even if the loss occurred while the contract was in force.