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Reinsurance Management

reasonableness and promptness is required from
the reinsurer which the broker looks for.

Q6. What are the factors influencing the
retention levels of an insurance company?

Ans: Factors influencing retention levels of an
insurance company are:
i) Assets, capital and free reserves, and solvency.
Financially stronger the company the higher the
risk it can retain. Insurer would not like to cede
premium income it generates to another company
and lose its potential to earn investment income
out of it.

ii) Size of the portfolio and premium income.
Premium is the only source for insurer to earn
out of investment. Ceding large volumes of
premium will lessen the chance for the insurer to
earn from investment.

iii) Risk appetite. Certain companies are risk averse
and hence do their business conservatively by

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