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Placing programmes
• The successful negotiation of a reinsurance programme depends on the quality and quantity of the information
provided to reinsurers.
• The reinsured has a duty to make a fair presentation of the risk to the reinsurer. Essential data includes:
– details of the insurer seeking reinsurance;
– the classes of business to be covered;
– premium income and aggregate exposures;
– the profile of the business to be reinsured;
– general experience;
– claims experience; and
– the exclusions that are applied to the original business.
• For its part, the insurer needs to be satisfied that its reinsurer(s) offers satisfactory security.
• It is common practice for insurers to have a Security Committee tasked with grading all current and proposed
reinsurance security, monitoring aggregate exposure to each reinsurer, and being alert to market news and
information with potential security implications.
• Grading reinsurers involves analysing:
– financial characteristics, in particular, size;
– quality of management and key underwriting personnel;
– capital structure, and the ultimate owner(s);
– ratings;
– domicile, that is, the political, legal and regulatory environment within which each company operates; and
– other qualitative characteristics such as historic speed of claims payment and service levels.
• In the London Market, a standard form of contract document, incorporating the full terms and conditions, has been
mandated (that is, the MRC) and has replaced the slip and any subsequent contract wording as the evidence of
contract.
• The MRC is in six sections: (1) Risk details; (2) Information; (3) Security details; (4) Subscription agreement; (5)
Fiscal and regulatory; and (6) Broker remuneration and deductions.
6 • Business can be placed in subscription or vertical markets.
Chapter • A debit note confirms premiums that are due from the insurer while a credit note sets out what premiums the Reference copy for CII Face to Face Training

reinsurer can expect to receive.
• Contract certainty is achieved by the complete and final agreement of all terms between the (re)insured and
(re)insurer by the time that they enter into the contract.
Reciprocity

• Reciprocity is the exchange of comparable business on a proportional basis.
• Participating insurers aim to retain gross profit while achieving a spread of business.
• The emphasis placed on reciprocal exchanges is to match profitability rather than premium volumes.
• When selecting a reciprocal partner attention needs to be given to:
– standard of management;
– experience of the underwriting team;
– the partner’s financial standing;
– the geographical spread of the business to be exchanged; and
– underwriting results.