Reinsurance

What is a Insurance Linked Security (CAT Bond)?

Securities that transfer a specified set of risks from a sponsor to investors.

What is reinsurance?

Reinsurance is a contract between the primary insurer and the reinsurer. The Insured is not a party to the contract and has no direct rights against the reinsurer.

What are the benefits for the insured?

All coverage obtained from one insurer and increases availability of insurance.

What is the difference between quota share and surplus share in Pro Rata Reinsurance?

Quota share the retention is a percentage of amount of insurance. Used for surplus relief. Surplus share is a fixed dollar amount. Used for large line capacity.

The policyholder and the reinsurer are connected to the ____ but not to each other.

Primary Insurer.

What are the benefits for insurance companies?

Stabilize loss experience, large line capacity, provides surplus relief, and protects against catastrophic losses.

What is the difference between Facultative and Treaty Reinsurance?

With Facultative Reinsurance is used to stabilize losses and large line capacity but there is no obligation from either party. With Treaty Reinsurance it is used for surplus and catastrophe relief.