Page 44 - Reinsurance Management IC85

Reinsurance Management

the end of each period known as Development
Statistics are required. Also some allowance for
IBNR (Claims Incurred but Not Reported) is to
be made.

b. Inflation: In some classes, especially liability
business, claims take a long time to be settled and
are affected by inflation for which underwriter
should make an adjustment whilst rating.

c. Currency Movement: Where limits are in one
currency and claims paid in various other
currencies, the exchange rate fluctuations affect
the burning cost calculations.

d. Changes in law: Amendment to existing law,
changes in underwriting practices and
development of areas subject to natural
catastrophes can affect claims under XL cover.
Hence, the utility of past results a guide to future
rating may be considerably reduced.

Sashi Publications - www.sashipublications.com 43

ight@ The Insurance Times. 09883398055 / 0988338