Please enable JavaScript.
Coggle requires JavaScript to display documents.
Risk transfer (1) (Responses to risk
(PIRATE) (Partially transfer (to…
Risk transfer (1)
-
-
-
Proportional reinsurance
-
-
-
-
Reinsurer may also pay the cedant a reinsurance commission, which can be used to provide financial assistance.
-
Reinsurance
Benefits
-
Reinsurer may offer competitive terms for admin, actuarial services and advice.
Costs
-
Reinsurance premium is likely to exceed cost of benefits (in the long run) as it will contain loadings for expenses, profit and contingencies
-
-
-
-
-
Quota share reinsurance
Advantages
Useful for small, new or expanding cedants who want to diversify their risk, write more risks or who would like reciprocal business
Administration is relatively simple, since it is written by treaty and a constant proportion is cede for all risks.
Disadvantages
It is inflexible in that the same proportion of each risk is ceded, irrespective of size or potential volatility
-
-
-
Surplus reinsurance
Advantages
% of each risk passed to the reinsurer can vary from risk to risk, allowing the cedant to 'fine-tune' its exposure. Useful where risks are heterogeneous in nature
Useful for cedants who want to diversify their risk, write more risks or write larger risks.
Disadvantages
extra admin and costs => generally appropriate for larger, more heterogeneous risks such as commercial property
-