Page 285 - Reinsurance Management IC85

Reinsurance Management

Q.7) “A” Insurance Co. underwrites Fire business

on PML basis. Show how a risk with Sum

Insured of Rs. 500 crores with PML @ 25%

is underwritten on following reinsurance

facilities :

Obligatory cession - 10% not exceeding Rs.

40 crores sum insured

Net retention - Rs. 2 crores PML.

Market Fire Pool - 40% not exceeding Rs.

30 crores PML.

First Surplus Treaty - 30 lines not exceeding

Rs. 50 crores PML.

Second Surplus Treaty - 20 liones not

exceeding Rs. 30 crores PML.

Balance reinsured Facultatively.

Also calculate share of Net retained loss on a

claim of Rs. 100 crores on the Risk.

Ans: Sum insured (in Rs.) = 500 Cr

PML (in percentage) = 25%

PML (in Rs.) = 125 Cr.

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