Page 308 - Reinsurance Management IC85

Reinsurance Management

Model Questions

Q1. Compare and contrast, from a reinsurer's
point of view, a motor portfolio and a
personal accident portfolio.

Ans: Single risk losses - Personal accident insurance
business is written on a fixed-sum basis meaning it is
easy to evaluate and monitor reinsurers exposure.
Motor liability cover is written on an unlimited basis
and has enormous exposure that is more difficult to
model.

Known accumulation - Both personal accident and
motor are exposed to known accumulation losses. In
personal accident, group policies are issued (for
example all employees of a company) and in motor
fleet policies (for example all cars on the forecourt
of a dealership). For both classes reinsurers are
assuming catastrophe exposures as multiple policies
could suffer losses from the same event.

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