Page 129 - Reinsurance Management IC85

Reinsurance Management

overriding commission received on such
arrangements may not be sufficient to cover the
administrative expenses.

iii) What kind of reinsurance arrangement in place
(treaty or facultative)? Facultative arrangement
involves more administrative work and each
offer has to scrutinized and individually accepted
or rejected. The underwriter should have an
insight of what are traffics and market
conditions of the market from where the risk
is emanating.

In case of treaty kind or arrangement, premium
volumes build rapidly but treaty underwriter
should be up to date with the dynamic
environment of the market from which the risk
is emerging. With huge volumes of premiums
comes huge variation in risk and different
conditions hence knowledge of underwriter
decides the fate of the results emanating from
the written business.

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