Page 252 - Reinsurance Management IC85

The Insurance Times

high values at single locations and demanding
special types of covers. The liabilities
accepted by insurers are onerous. The
depreciation in the value of money, the
increase in the size of court awards, increasing
value concentration and the increasing number
and size of potential liabilities all combine to
affect the cost of claims. Furthermore, the
period from the date of occurrence of an
accident to final settlement of the claim often
extends for a number of years. In addition it
is impossible to judge to any accurate degree
the maximum possible loss in advance in
dealing with risks which have possibility for
high aggregation of limits for total indemnity.

As his own protection, therefore, an original
insurer arranges reinsurance with a reinsurer who
accepts part of the risk of loss. The reinsurer
may be another insurer who either accepts
reinsurances in addition to his direct insurance
underwriting or he may be a specialist insurer who

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