Let us talk about reinsurance!

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Heute kann jeder Erstversicherer bei internationalen Versicherungsprogrammen schnell zum Rückversicherer werden: Wenn nämlich der ausländische Fronter einer lokalen Police die Prämien auf dem Wege der Rückversicherung an den inländischen Leader des Programmes zediert, können die Beiträge dort nur als indirektes Geschäft (aktives Rückversicherungsgeschäft )gebucht werden. 

Mit dieser Folge schließen wir die Serie Versicherungsenglisch für Versicherungsvermittler mit dem Thema Rückversicherung ab. Hier noch ein Tipp für unsere Leser, die kommunizieren oder übersetzen: Keep it short and simple (KISS) So erleichtern Sie sich und Ihrem/Ihrer Partner/in die Arbeit.

 

"All insurance companies need reinsurance in case of large claims"  How would you define the term reinsurance?

  1. Reinsurance is a contractual arrangement between a primary insurer and a reinsurer:
  2. The primary insurer spreads the risk of an insurance, by asking another insurance company to cover part of it and to receive part of the premium (proportional reinsurance), or
  3. a primary insurer may pay the reinsurer a reinsurance premium in return for a promise by the reinsurer to pay claims above a certain amount (deductible) that would occur (non-proportional reinsurance).

What methods of reinsuring can we distinguish?

  1. Facultative business
  2. Facultative Obligatory Treaty
  3. Treaty business

Can you distinguish between Ceded/Outwards/Outgoing and Assumed/Inwards/ Incoming reinsurance business?
The primary insurer buys reinsurance, the reinsurer sells reinsurance. Accordingly we name reinsurance from the viewpoint of the primary insurer as 'ceded', from the reinsurer‘s viewpoint as 'assumed'.

What types or forms of reinsurance can we distinguish?

  1. Proportional/Pro rata
  2. Second-risk
  3. Non-proportional/Excess

Describe typical features of proportional/ non-proportional reinsurance forms.

Proportional
The risk to be reinsured is spread between the insurer and reinsurer in pre-defined percentage proportions.
The reinsurer receives the same share of the premium as the share of the claim it will pay.   

Non-proportional
The insurer bears all losses up to a certain figure (deductible), and the reinsurer pays only that part of a loss in excess of the deductible.

What are the principal forms of proportional reinsurance?

  1. Quota share
  2. Surplus

What is typical for a Quota share treaty/ for a Surplus treaty?

Quota share treaty
The reinsurer takes a certain proportion of all risks written by the insurer.

Surplus treaty
If the sum insured for a given risk exceeds the insurer‘s retention, the difference between the sum insured and the retention is ceded to the treaty.

What principal forms of non-proportional reinsurance can we distinguish?

  1. Excess of loss (XL)
  2. Excess of loss ratio/ Aggregate Excess/Stop Loss (SL)

What is typical for an Excess of loss (XL)/ for an Excess of loss ratio/ Aggregate Excess/ Stop Loss (SL)?

Excess of loss (XL)
The reinsurer pays only that part of a claim in excess of the deductible „per risk“ or "per event".

Excess of loss ratio/ Aggregate Excess/ Stop Loss (SL)
Cover against fluctuations of the net claims ratio of a particular account over one financial year.

Can you distinguish between Excess per Risk/ (Per Risk XL)/ Working-XL and Catastrophe XL (Cat.-XL)?

Per risk XL
Applies in excess of a specified retention applicable to a single policy or risk.
Reinsurer‘s liability: "if the ultimate net loss (UNL) per risk exceeds the deductible".

Cat. XL
Applies in excess of a specified retention applicable to a combined loss involving multiple risks and which arises from one event.
Reinsurer‘s liability: "if all claims payments arising out of any one loss occurrence exceed the deductible".

The author

After many years working in the insurance business (mainly in the non-life sector) and being involved in various teaching activities and projects dealing with textbooks, Dieter Aigner has gathered additional experience as an English trainer on behalf of BWV Rhein-Main since 2009.

Dieter Aigner

Autor(en): Dieter Aigner

Zum Themenspecial "Versicherungsenglisch"

 

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