Page 175 - Reinsurance Management IC85

Reinsurance Management

of all the risk written in their fire account and
cede any amount over it to reinsurer then any
risk above Rs.25,000 will be borne by the
reinsurer.

The amount retained by reinsurer is called as
'line' and the agreement will always be multiples
of line,

If suppose the risk is for Rs.1,00,000 and the
reinsured line is Rs.25,000, then reinsured share
in risk is Rs.25,000 and reinsurer share is
Rs.75,000. Means 25% is borne by reinsured and
rest 75% by reinsurer.

If suppose the risk is for Rs.1,25,000 then
reinsured share in risk is Rs.25,000 and reinsurer
share is Rs.1,00,000 . Hence 20% is retained by
reinsured and rest 80% by reinsurer.

Premiums will be shared in accordance with the
risks that are shared.

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