Page 145 - Reinsurance Management IC85

Reinsurance Management

the retention with specified multiples of ‘line’,
which is described as “x lines first surplus”.
There can be second or third surplus
depending upon the risks underwritten by the
insurer.

Eg: a ten line first surplus treaty subjected to a
maximum cession of Rs.5,000,000 any one risk.
One line is a maximum of Rs.500,000 thereby
giving a maximum gross capacity of Rs.5,500,000
on the best risk.

Sum Insured Insurer Share Reinsure Share

Risk 1 1,000,000 500,000 500,000 (50%)

Risk 2 500,000 500,000 0 (0%)

Risk 3 3,000,000 500,000 2,500,000 (83.33% / 5

lines)

Risk 4 4,000,000 500,000 3,500,000 (87.5% / 7

lines)

Risk 5 6,000,000 1,000,000 5,000,000 (83.33% / 10

lines)

b) Reinsurance companies have employed

information technology in a big way to simplify

Sashi Publications - www.sashipublications.com 143

ight@ The Insurance Times. 09883398055 / 0988338