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h) Securitization: capacity constrains in catastrophe
market can be overcome by securitizing
catastrophe risk portfolios and place them direct
with investors in the form of securities.

Policyholders can have comfort by way of
removing credit risk since capital is made available
before the loss occurs and for investors it gives
a chance of a higher coupon rate.

Q3. What are the key considerations in
arranging reinsurance negotiations?

Ans: Key considerations in negotiations are:
i) Ceding insurer financial background is very
important for reinsurer.

ii) Ceding insurer’s underwriting policy will determine
what type of risks will be allowed into the
portfolio.

iii) Knowledge and expertise of the underwriter will
be important for reinsurer. A prudent underwriter

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