Page 17 - Reinsurance Management IC85

The Insurance Times

Disadvantages to Reinsurer:
Normally, any ceding company resorts to facultative
reinsurance only for risks which it is not able to
accommodate in its Treaty arrangements. Hence, the
Reinsurer, because of other trading connections, may
be obliged to accept a facultative offer with high loss
potential.

Advantages to the ceding company / reinsured /
insurer :
i. Increase in gross underwriting capacity,
ii. Ready market for risks of indifferent quality

Disadvantages to the ceding company / reinsured /
insurer :
i. High administrative costs,
ii. Time consuming procedure.
iii. Ceding company cannot assume risk and later

cannot alter policy conditions, without concurrence
of reinsurer.
iv) Risk of omitting to place reinsurance and omission
to renew.

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