Page 89 - Reinsurance Management IC85

The Insurance Times

Q. Give reasons why a direct company may
wish to write inward reinsurance business.

Ans: The reasons are:
a. to increase the gross and net retained premium
and supplement the company's growth.

b. to achieve a lower expense ratio by maintenance
of the volume of premium income by compensating
for premium outgoings in reinsurances ceded.
However, the overall cost of inward reinsurance
as opposed to the cost of procuring direct business
should be compared.

c. to obtain a better and wider spread of business by
writing business from overseas. This minimises the
effect of fluctuations normally encountered in
reinsurance business.

d. to compensate for drain of foreign exchange on
account of reinsurance ceded abroad, especially
in developing countries.

e. to be in touch with the international reinsurance
market for latest developments and techniques.

Website: www.bimabazaar.com Call: 033-22184184 / 40078428 88

ight@ The Insurance Times. 09883398055 / 0988338