Chapter 9 Flashcards
(15 cards)
What is reinsurance?
Reinsurance is the transfer of part of the hazards or risk that a direct insurer assumes by way of insurance contract or legal provision on behalf of an insured to a second insurance carrier who has no direct contractual relationship with the insured
Define ceding company
The company that transfers, its risk to a reinsurer. A session is the document or electronic transmittal that describes the risk transferred usually on an individual policy level.
Define reinsurance treaty
It is the written contract, defining the reinsurance agreement. The treaty defines the relationship between the seating company and the reinsure, the business to be covered under the treaty, the reinsurance to be provided, and its cost.
What is a retention limit?
The specified maximum amount of insurance that a life insurer is willing to carry at its own risk on anyone life
What is a retrocessionaire?
A reinsurer that contractually accepts risk from another reinsurer
A company can vary its retention limit by selected criteria such as what
Age, underwriting, classifications, or plan type.
What is assumption reinsurance?
If a direct writing company permanently, transfers, all of its contractual obligations on the assume is to the reinsurer
What other resources can reinsurance provide?
Knowledge that the direct carrier may not have in the areas of underwriting, actuary, science, claims, product development, and policy administration
Financial reassurance covers non-mortality risk such as:
Policy persistency, interest, cash, values, reserve requirements, secondary guarantees, return of premium
YRT - yearly renewable term - excess of retention
In a YRT arrangement, the ceding company pays reinsurance premiums to the reinsurer that are based on the age and sex of the insured and duration of the contract. Premiums typically increase each year as the insured ages
What is YRT quota share
A form of reinsurance in which premiums and losses are shared proportionately between the seating company and the reinsurer
What is coinsurance?
A reinsurance arrangement in which the assuming company receives a proportionate quote, a share of all the risk and cash flows of the policy.
What is catastrophe reinsurance?
A specific type of mortality reinsurance that is used to protect a company against the short term earnings impact of incurring multiple large claims at one time. It provides coverage for losses, resulting from an accident or natural disaster involving more than one insured.
What does catastrophe reinsurance typically not cover?
Those due to war or natural causes
What are the parts of a reinsurance treaty
Parties to the agreement, automatic reinsurance, facultative reinsurance, commencement of liability, reinsured risk amount, reductions, terminations, and changes, conversions, exchanges, and replacements, claims, errors and omissions, dispute, resolution, arbitration, forms, manuals, and issue rules
