Page 232 - Reinsurance Management IC85

The Insurance Times

The primary objective of reinsurance is that
u It should reduce the company's probability of

bankruptcy at a price acceptable to the
company.

u It should stabilize any fluctuation in the company's
annual aggregate claims experience so that wide
fluctuations in results from one year to the next
are avoided;

u Reinsurance can be used to allow a company to
accept risks beyond its normal retention and
so ensure that it is not placed at a serious
disadvantage compared to its competitors;

Other Objectives :
A. Technical -

The technical results of the insurer / reinsurer
needs to be stabilised by reducing fluctuations in
claims to the yearly retained account.

B. Business efforts of the insurer -
i. The programme must be such that it is flexible

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