SSAP 62: Reinsurance Flashcards Preview

Exam 6 > SSAP 62: Reinsurance > Flashcards

Flashcards in SSAP 62: Reinsurance Deck (13)
1

Reinsurance definition

Assumption by an insurer all or part of a risk undertaken originally by another insurer

2

Treaty reinsurance

Transfers whole class or type of business written

3

Facultative reinsurance

Transfers individual risks

4

Criteria for reinsurance

Insolvency clause; recoveries without delay; no guarantee of profit; quarterly reporting; funding clause

5

Retroactive reinsurance additional criteria

Premium paid must be fixed; compensation to either party prohibited; contract cannot be cancelled w/o approval of commissioner

6

To be treated as reinsurance

It needs to be reasonably possible for the reinsurer to realize a significant loss

7

Accounting treatment, prospective reinsurance paid

Reduction to WP, EP

8

Accounting treatment, reinstatement premiums

Earned over period from reinstatement to expiration

9

Accounting treatment, change in estimated reinsurance recoverables

Changes in losses incurred

10

Accounting treatment, reinsurance recoverable on unpaid losses

Reducing respective reserves

11

Six principle functions of reinsurance (Blanchard)

Increase large line capacity
Provide CAT protection
Stabilize loss experience
Provide surplus relieve
Facilitate withdrawal
Provide UW guidance

12

Accounting treatment of commutation, ceding company

Premium = recovery of paid loss; eliminates reserves ceded to reinsurer

13

Accounting treatment of commutation, reinsurer

Premium = paid loss; eliminates associated loss reserves