Page 228 - Reinsurance Management IC85

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the profit commission statement for the current open
"Underwriting Year". An example of this type of
profit commission would be the same as illustrated
for the "Accounting Year" statement except that
there would be no premium reserve brought forward
/ carried forward and no loss reserve brought
forward.

Q4. a) Discuss the crucial role of reinsurance
in addressing the limitations to the law
of large numbers, preserving the income
from investment and insulating
shareholders' funds from unpredictable
loss scenarios.

b) Explain the need for reinstatement
provisions under excess of Loss
Treaties.

Ans: a) The economic basis of insurance is that the
occurrence of loss affects a fraction of a large
population.

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