Page 312 - Reinsurance Management IC85

Reinsurance Management

why an insurer might prefer reinsurance to
co-insurance.

Ans : Co-insurance is a method where one insurer shares
direct responsibility for a risk with one or more
insurance companies. Effectively it is a means of
increasing the capacity of a market to underwrite risks.
Reinsurance is effectively a method of passing risk
on to a reinsurer in order to increase its capacity.

Re-insurance is preferable
The main reason would be that an insurance company
is not interested in sharing risks. Reinsurance can
therefore be used to increase its capacity to offer
cover for the entire risk.

Q5. What are the advantages and disadvantages
of capital market solutions as opposed to
traditional reinsurance solutions?

Ans: In general terms, the advantages of the capital
markets are:
u they have the potential to offer significantly more

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