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Reinsurance Management

aggregate excess treaty can be lowered if adequate
catastrophe reinsurance is carried.

Again the limit of a catastrophe can be lower if it
applies only to the retention of the primary insurer
after recoveries from pro-rata reinsurance, rather than
to the direct losses.

Q. State advantages and disadvantages of
facultative reinsurance to the insurer and
reinsurer.

Advantages to the reinsurer:
1. Detailed examination of risk before deciding

acceptance.
2. Can suggest risk improvement measures and

influence the underwriting policy of the insurer.
3. Can obtain adequate premium by negotiating on

rates and commissions.
4. Facilitates accurate compilation of commitment per

risk and accumulations.
5. Knowledge of insurer's underwriting and selection

methods.

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