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Advantages Of Reinsurance

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(a) How two forms of reinsurance could limit net claims

Reinsurance are insurances obtained or purchased by an insurance company as a form of risk management and to protect insurer’s bottom line by sharing risk with reinsurers and protecting themselves from adverse loss experience. Reinsurance is a contractual arrangement whereby an insurer secures and obtains coverage from a reinsurer from a potential loss to which they are exposed under insurance policies issued to original insured.

Proportional reinsurance across a portfolio is characterized by a proportional division of premium and liability between the ceding company and the reinsurer of all the risks that falls within a specified criteria. The Cedent Insurer pays the reinsurer a predetermined …show more content…

In such reinsurance arrangements, the ceding company is not obliged to cede all risks to the reinsurer, but neither is the reinsurer compelled to accept and provide reinsurance protection. The portion of the risk that the reinsurer accepts or writes is referred to as ceded risk, and the portion the cedant accepts is referred to as the reinsurance retention. Such facultative reinsurance can again be on a quota share or surplus basis. For example, if ABC plc has a 10 percent facultative quota share reinsurance for this policy, the facultative reinsurer shall bear £1 million of that loss. The net claim in the above circumstances will be £ 5 million to ABC plc (i.e. £4 million recovered from the proportional portfolio reinsurer and £1 million recovered from the facultative quota share …show more content…

It is therefore very important that the claims handlers should know to whom to refer any complaints received. When a formal complaint is received, the insurer is expected to send the client a copy of the FOS explanatory leaflet. It should also advice them that they can refer the complaint to the FOS if the insurers complaints process does not lead to a satisfactory resolution. For commercial clients, the FCA complaints handling requirements follow the same principles, but are less strict in detailed provisions. Complaints from all insured’s must be recorded and reported to the

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