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INSURER OWNERSHIP, FINANCIAL AND
OPERATIONAL STRUCTURE (INSURER CAPITAL…
INSURER OWNERSHIP, FINANCIAL AND
OPERATIONAL STRUCTURE
INSURANCE :
:red_flag: pooling of fortuitous losses by transfer of such risks to insurers , who agree to indemnify insured for such losses
:red_flag:to provide other pecuniary benefits on their occurence, or to render services connected with risks
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REINSURANCE
PRIMARY ROLES :explode: reduce variance in claim costs by diversification and exposures to very high claims
:explode: reduce amount of capital needed to achieve a given probability of insolvency
TYPE OF REINSURANCE
: :pencil2: TREATY- Nature of the transaction that covers multiple
policies written by ceding insurer.
:pencil2: FACULTATIVE - Nature of transaction that the insurer evaluate each risk that the primary insurer would like to cede and decides whether to accept it on a case by case basis.
: :pencil2: Excess (non- proportional)
-The reisurer pays part of the ceding insurer's claims only if a
particular threshold is reach
--threshold based on: claims costs from a single policy, known
as per risk excess reinsurance.
: :pencil2: Proportional ( pro-rata reinsurance ) - the ceding (buyer) company pays a proportion of its premium on a pool of policies to a reinsurer
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INSURER CAPITAL
THE MARKET VALUE OF ASSETS - Reflects the market value of the insurer's stocks,bonds,real
estate,cash and the like.
ECONOMIC CAPITAL -The difference between the market value of assets and the
market value of liabilities.
THE MARKET VALUE OF LIABILITIES - Equals to the present value of the payment the insurer had promised to make in the future for policies already sold
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