Previously entitled ‘Nuts and Bolts of Reinsurance’, this new edition is a must for all brokers, underwriters and anyone who has to know and understand reinsurance.
Written in a concise and readable style, it will appeal to students and practitioners alike.
Includes practical exercises, worked examples, and explanation of portfolio transfers, profit commission calculation, hours clause, wording, excess of loss cover, and ratings.
Author(s): Riley, Keith
Published: 2001
Binding: Paperback
ISBN 10: 1856092135 ISBN 13: 9781856092135
CONTENTS
Preface
Chapter 1 What is Reinsurance, and Why do we Need it?
Chapter 2 Types of Reinsurance
Facultative
Pro rata (or Proportional)
Excess of Loss (Non-proportional)
Treaties
Pro rata Treaties
Quota Share Treaties
Surplus Treaties
Facultative Obligatory Covers
Cessions to Treaties
Special Considerations
Basis of Cession
Top Location and Pro rata Basis
PML Basis
Per Policy Basis
Per Bottom Basis
Per Vessel Basis
Per Person Basis
Practical Exercise 1 - Distribution of Premiums and Claims Over a Proportional Programme
Chapter 3 Treaty Reinsurance - Financial Aspects
Premiums
Commission
Tax
Premium Reserves
Loss Reserves
Interest on Reserves
How Reserves are Accounted
Losses
Cash Loss Refunds
Premium and Loss Portfolio Transfers
Clean-cut Versus Underwriting Year Basis
Calculation of Unexpired Premiums
The 1 /24ths System
1/8ths System
A Fixed Percentage
Profit Commission
Practical Exercises 2 (a) and (b) - Profit
Commission Calculations
Deficit Carry Forward
Underwriting Year Basis
Chapter 4 Proportional Treaty Wordings and Clauses
Period and Termination
Errors and Omissions
Self Insured Obligations
Inspection of Records
Arbitration
Bordereaux
Chapter 5 Designing a Property Reinsurance Programme from Historical Data
Data
Apportionment over the Treaty Programme
Constructing the Spreadsheet
Chapter 6 Excess of Loss Covers
Chapter 7 Excess of Loss Reinsurance — Financial Aspects
Premium
Rate
Premium Income
(Minimum and) Deposit Premium
The “Penal” M & D
Other Variable Ffactors
Loss payments
“House Clause”
Practical Exercise 3 — Allocating Claims Over an Excess of Loss Programme
Reinstatement Premiums
Burning Cost Rating
Working Covers
Definition of Burning Cost
Burning Cost Spreadsheet Model
Chapter 8 Excess of Loss Rating
Exposure Rating
Constructing the Property Risk Excess
Rating Model
Catastrophe Rating
Constructing a Catastrophe Rating Model
Chapter 9 Market Evolution
Chapter 10 Miscellaneous
Retrocession Treaties
Reinstatement Premium Protections
Additional Reinstatement Covers
“Alternative Reinsurance”
Thinking Things Through
“Graded Retentions Make Better Treaties”
“Quota Share Bad, Surplus Good”
Chapter 11 Over to You
Chapter 12 Appendices
Appendix 1 - Answers to Practical Exercise 1
Appendix 2 - Answers to Practical Exercise 2
Appendix 3 - Answers to Practical Exercise 3
Appendix 4 - Specimen Scale of Property First Loss Rates
Appendix 5 - Specimen Treaty Wordings
Non Marine Surplus Treaty
Motor and General Liability Excess of Loss
Marine Cargo and Hull Excess of Loss
General Catastrophe Excess of Loss
Index
