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The Insurance Times

(c) Social Reinsurance -Social Reinsuranceis a variantofwhite-labelling inthecontext
of rural insurance. Here NGOs play the role of distributor and outsource the design
and administration of the entire insurance product to an insurance company who
effectively acts as areinsurer. TheNGOs provideaccess to customer touch functions,
claims intimations, underwriting, etc in acost efficient manner.

However, the product design, controls over underwriting and claims management
are designed by the reinsurance company. These are popular in countries like
Kenya, Uganda and Tanzania. The local insurance companies of those countries
do not have the skill to design and price rural health insurance products and the
regulations also do not require that such products are sold by insurance
companies only.

Q5. Discuss the criteria used by insurance companies to decide on their
reinsurance programs.

Ans. The criteria used by Insurance Companies to decide on their Reinsurance Programs
are :

(a) Current portfolio size and claims volatility- the larger the portfolio, the lower the
volatility and lower the inherent need for reinsurance.

(b) The extent of capital ' credit' available from reinsurance.

(c) The extent of technical support needed from the reinsurer.

(d) Extent of product innovation under consideration for the next year. If the companies
plan to introduce new products where there is not enough clarity on the expected
claims experience, then thereinsurance provides avaluable sourceofrisk mitigation.

(e) Many countries have mandatory reinsurance requirements of a certain amount of
business. For e.g, in India, 10% of all the business (including health insurance business)
written by all general insurance companies must compulsorily seeded to GIC.

290 Guide for Health Insurance