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Personal accident
• A typical list of benefits would include some, or all, of: death, disability, a daily allowance, an allowance for
hospitalisation and/or medical expenses.
• The underwriting considerations affecting the reinsurance of a personal accident account include:
– ratio of retention to liability;
– premium volume of accident business in the client’s overall portfolio;
– the premium volume split between individual and group business;
– gross results for the past five years;
– information on major losses and known accumulations;
– exclusions to be applied.
• Accumulation risks arise where a number of insured persons gather in the same place or are exposed to the
same peril.
• A distinction needs to be made between known and unknown accumulations.
• For individual business, quota share reinsurance may be appropriate; whereas for group business proportional
reinsurance and catastrophe excess of loss covers are used.
Employers’ liability
• Cover applies in respect of the legal liability of the employer for employees sustaining death, illness or disease
resulting from an accident that arises out of and in the course of their employment.
• The reinsurance underwriter would want details of:
– schedules of the benefits specified in the workers’ compensation statuses;
– whether any benefits can be increased retroactively;
– details of any situations that give rise to accumulations of employees in hazardous environments; and
– a policy profile that shows limits and attachment points if the insured is writing excess layers.
• Occupational diseases can result in a large number of claims from affected employees.
• Excess of loss tends to be the most popular form of reinsurance coverage.
Workers’ compensation
• Workers’ compensation insurance covers an employer’s liability that arises from employee’s injuries sustained at Reference copy for CII Face to Face Training
work and is generally in line with the relevant country’s or state’s workers’ compensation act (which, in many
cases, imposes strict liability). Coverage is generally limited to some degree either by quantum or by time.
• A&H insurance includes annual private medical insurance cover for hospital expenses, including operation,
treatment and nursing costs. It is often written on a group basis covering the employees of a particular company.
• Unlike EL cover, workers’ compensation provides for a ‘no fault’ system so it is unnecessary for the employee to
prove negligence, reasonable redress for economic loss, and scales of compensation (but no compensation for
pain and suffering).
• Most of the accumulation patterns that concern reinsurance underwriters of EL business are also relevant to the
field of workers’ compensation.
• Reinsurance can be effected on a proportional or non-proportional basis and this will affect the underwriting
information required by the reinsurer. The most common form is excess of loss where accumulations can be
limited by a strict event definition.
Public liability
• Cover provides protection against the financial consequences of claims for compensation filed under civil law by
third parties that have suffered loss or damage.
• The reinsurance underwriter would want details of:
– the nature of the classes of business written by the reinsured (showing the split between commercial and
industrial, large and small operations).
– the limits written in respect of bodily injury and property damage;
– whether the basis of coverage is ‘losses occurring’ or ‘risks attaching’;
– past loss history and whether an allowance for IBNR has been made;
– whether original policy coverage allows for legal costs;
– the extent of pollution cover; and
– details of the reinsured’s insurer’s exclusion list.
• Accumulations mainly arise from pollution risks which tend to be covered so that only accidents occurring at a
particular place and time are insured.
• Proportional reinsurance may be purchased by new companies although excess of loss reinsurance is usually the
11 most popular option.
Chapter