Page 17 - Insurance Times November 2019

way to have a fair reliable estimate of Global Reinsurance more than net retention limits of Insurance Companies
Premiums. according to levels of this Financial Net Worth. However,
Reinsurance is required on a policy attaching basis or on
Normally Reinsurance requirements for Life Insurance Financial Year basis.
Premiums of markets Globally remains lowest with the ratio
of around 2% of Global Life Premiums and not more than In case of Motor OD/TPL, limits are well within Net Capacity
10% of Global Non-Life Premiums. Again various classes of of Insurers. Hence, these are protected by Excess of Loss
General Insurance i.e. Non-Life Insurance have different Treaties with 100% Net Retention of entire Portfolio of
ratios of Reinsurance requirements. Motor OD and TPL Risks.

Property, Engineering, Aviation and Marine have erratic In case of Life Insurances, Maturity Claims ratio of entire
ratios of Reinsurance Premium Outgo. Motor and Health business is generally 80% to 85% of Life Insurances. These
segments in the last 5 years have recorded higher and are not needed to be reinsured.
higher growth rate.
Risks with Insured Claims in Life Insurance business
Agriculture has become special class to be recognized in comprises of 15% to 20% of entire life insurance portfolio
General Insurances. In context of Indian Markets, of Risks.
Agriculture Premium is around 280 Billion INR, which is
15.4% of the Total Premium of 1819 Billion INR. Reinsurance other than maturity claims portfolio of life
Reinsurance Premium outgo is also around 10% of these insurance risks needs reinsurance by large Risks XL Treaties
premiums. Again Motor and Health Premiums have or Fac Reinsurances. Sometimes Quota Share Treaties are
Reinsurance Premium outgo of around 1.5% only. created to cover against catastrophes. Generally
Specialized clauses like Aviation and Oil and Energy Reinsurance is by Low Cost Covers.
Premiums have higher ratios of Reinsurance Premium
outgo. Basis of Estimating Reinsurance
Premium outgo for 2018:
However, as Global Scenario, the Reinsurance Premium
outgo remained an illusive figure to be specified. Life Insurance Premiums for 2018 are US$ 2820 Billion.

If Motor and Health Premiums are with Maximum 1.5% Around 88% to 90% is Life Insurance Portfolio of Maturity
outgo of Reinsurance, other classes of General Insurance Claims i.e. Life Premiums available for Investments. In this
will give around 20% as Reinsurance Premium Outgo. This segment Reinsurance is not required.
is 20% of 40% of Global Non-Life Premium of US$ 2373
Billion i.e. US$ 190 Billion or US$ 200 Billion. Around 12% to 10% is Life Insurance Portfolio of Risk
Premiums are estimated to be impacted by insured losses.
Reinsurance Premiums of Life business may be 2% of US$ Reinsurance Protection of this segment is around 20% of
2820 Billion i.e. US$ 56 Billion and not more than US$ 60
Billion.

Reinsurance Requirements:
Reinsurance is required for creation of Automatic
Underwriting Capacity on Any One Risk Liability on Total
Sums Insured and also protection of Net Retentions by
Excess of Loss Treaties in event of Large Risk Losses and also
against Accumulations of many risks in events of Natural
Catastrophe.

However, Health Insurance has no higher vertical limits for

The Insurance Times, November 2019 17