Page 301 - Reinsurance Management IC85

The Insurance Times

if any claim occurs the whole capital of the
company would be wiped out and it would not
be in a position to pay the claim.

So the concept of reinsurance helped the direct
insurance companies to expand their capacity and shift
the risk to some other insurance companies so that
they may continue to write different types of direct
insurance business without limiting their capacity.

In the history of marine insurance the oldest
known reinsurance contract was concluded in the
year in 1370 in Genoa. The British legislation
forbade marine insurance unless the insurer went
bankrupt, became insolvent or died and it remained
forbidden until 1864.

In this age of economic advancement the
reinsurance concept has become inevitable. As the
risk is growing, the nature of risk is getting
complex and it is utterly difficult for any particular
insurance company to share the burden of the
complicated risk.

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