Page 161 - Reinsurance Management IC85

Reinsurance Management

b) State the guidelines for evolving of good
statistical system.

Ans: a) i) Both insurers and reinsurers need statistics
for decision making and review purpose.
Reconciliation of accounts depends on past
statistics.

ii) Review of past data is vital for calculation of
premium and commission to be paid.

iii) Statistics will also decide the extent of cover
that can be obtained. Usually reinsurance
companies can avoid certain exposures if they
found past data revealing greater losses from
a particular class or portfolio.

iv) Heterogeneity of business written warrants
huge amount of data requirement. The
various factors that affect underlying trends
are class of business, type of reinsurance
contract, legislations in place, type of claims,
currency and inflation.

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