Page 178 - RISK Management IC 86

Risk Management

reinsurance should be used to reduce its liabilities to
acceptable levels.

The nature of the portfolio is also an important factor
too. Considerations should be given to (i) spread of risk
and (ii) potential exposures to, large individual losses,
accumulations of losses from one event and
accumulations of losses in any one year.

Reinsurance Arrangements and Terms - Protection
against the various types of risks can be obtained by
purchasing appropriate types of reinsurance.

So, for Individual large losses - Proportional - quota
share or surplus or excess of loss on a risk basis

For Accumulations from one event - Excess of loss
on a risk basis

For Accumulations in any one year - Stop loss

The respective merits and demerits of each type of
Reinsurance should be noted in the report for easy
decision. Generally surplus reinsurance is not favoured
by captives because of the administrative burden.

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