Page 296 - Reinsurance Management IC85

Reinsurance Management

companies locally as well as internationally.

But there are certain cases where the reinsurance
arrangement may not be that appropriate looking
to the nature of risks covered or the reinsurers
may not accept such kind of risk or the cost of
ceding such risks to reinsurers may be high.

In such cases the insurance companies enter into
an arrangement to make a local pool where in the
companies pools assets, enabling them to provide
an amount of insurance substantially more than
that can be provided by individual companies to
insure large risks.

Pools are multi-insurer agreement under which
each insurer in the group or pool assumes a
specified portion of each risk ceded to the pool.

Pools are formed generally for risks which are
either on uninsurable abroad or due to compulsory
nature of coverage through state legislation.

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