Page 115 - Reinsurance Management IC85

Reinsurance Management

process of reinsurance of life insurance.

Ans: The life reassurance differs from other classes of
reinsurance. The nature of risks assumed by the life
insurance has necessitated the development of various
forms of reinsurance.

The proportion of total life insurance premiums reinsured
is small in comparison with most of the non-life insurance
classes. The demand for life reinsurance arises on account
of a) difference in the number of deaths and b) death
strain.

Life insurers mortality risks arises on account of
uncertain calculations of death claims made by him with
the help of mortality tables. However in practice, the
actual number may differ resulting in wide dispersion.
Such divergence will have impact on the earnings of a
Life Insurance Company.

The cost to a life insurance company in case of a claim
is the sum assured plus bonus, if allowed. Cost
minus reserves applicable to the policy gives the

Sashi Publications - www.sashipublications.com 113

ight@ The Insurance Times. 09883398055 / 0988338