Page 243 - Reinsurance Management IC85

Reinsurance Management

cheaply, with greater capacity, and with greater
spread of risk. An umbrella reinsurance contract
is offered to one set of reinsurers who all take a
fixed percentage of every treaty in the contract.
One reinsurer may take 5% across the board,
another may take 10%, and so on, until the
umbrella contract is totally placed. All the treaties
that compose the umbrella contract are written
as one block of business; hence, the reinsurers
are prohibited from choosing which treaty they
want to reinsure. By combining all the reinsurance
treaties into one contract, if a catastrophe loss
results, each reinsurer will assume only a
percentage of the loss instead of assuming the
entire loss by itself.

c) Stop loss: the reinsurer covers losses incurred by
an insurer in a particular class of insurance business
when his annual loss ratio exceeds an agreed
percentage of the earned premium for that class.

d) Cash Call facility : A reinsurance contract

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