Page 72 - Reinsurance Management IC85

Reinsurance Management

b. Normal rules for the winding up of companies
apply to insurance and reinsurance companies.
The original assured has no claim against the
reinsurer and in the event of reinsured's
insolvency, the reinsurer pays any amount he
may owe after filing accounts to determine
balances due, to the official liquidator who
distributes such payments for benefit of all the
creditors.

Q. "The fixing of retentions is an important part
of a reinsurance programme". Discuss this
statement enumerating various factors which
influence retentions.

Ans: Retention is the maximum amount the ceding
company is prepared to pay on any loss affecting a
policy, risk or group of risks. It is essential that an
insurer limits his liabilities in order to protect his
capital and reserves.

The potential profitability of an insurance portfolio
depends upon underwriting skills. But the actual profit

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