Page 302 - Reinsurance Management IC85

Reinsurance Management

In this current scenario reinsurance has helped in
the development of the insurance market as a
whole by providing following benefits:-

1. INCREASED CAPACITY
Reinsurance provides the insurer with the extra
capacity that he required to accept such risks and
with the support of reinsurance enabled him to
handle large loss events.

2. FINANCIAL STABILITY
Reinsurance provides the financial stability to
insurers by paying the reinsured portion of the loss.
In addition to the reinsurance arranged on individual
risks, the insurer would also require to supplement
this protection to limit his loss arising out of a single
event causing loss or damage to many risks.

3. STABILIZATION OF CLAIMS RATIO
Reinsurance absorbs the impact of fluctuations,
allows the insurer to achieve a premium spread
over several years and be seen in the eyes of his
insured as financially stable".

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