Page 42 - Reinsurance Management IC85
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Reinsurance Management
claims for the year Rs. 14,000
Premium to be adjusted on the basis of burning
cost with a loading factor of 100/70 and minimum
rate 3% and maximum 7%.
a. 'Burning Cost'
The ratio of claims paid and outstanding for the share
of the excess of loss reinsurers to the Gross Net
Premium Income (GNPI) of the company for the period.
Is known as 'Pure Burning Cost'. A factor of loading
usually 100/70 is applied to the pure Burning Cost to
determine the 'Loaded Burning cost' which is the base
rate for excess of loss reinsurance and which is normally
subject to a maximum and minimum.
Incurred Claims
b. Pure Burning Cost= x 100%
GNPI
14,000
= x 100%
10,00,000
100
Loaded Burning Cost = x 100%
70
Rate for XL cover = 2%
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