Reinsurance Tutorials #10 - Season 3
Hi everybody 👋
Today, and for the tenth Reinsurance Tutorials video of the season, we will talk about "How to define the appropriate reinsurance structure for your coverage needs"
This subject will be addressed by CCR Re experts Perrine Carolo and Bertrand Petras.
Let’s start! ⏬
[Perrine Carolo] : Hello I am Perrine Carolo, Underwriter & Actuary - Life & Health in France and Europe. And today I stand with Bertrand.
[Bertrand Petras] : Hi Perrine, Hello everybody, I am Betrand Petras, Vice President Life & Health Middle East/North Africa. Today we will see how to define the appropriate reinsurance structure for your coverage needs.
[Perrine] : Let’s start right away.
[Bertrand] : You will choose a Proportional structure to:
[Bertrand] : In a proportional structure, capital requirement is lower than in non-proportional ones, then companies can then dedicate that capital to other projects.
The cedant can also benefit from the proportional structure by improving its risk management as part of the risk is transferred to reinsurers. For example, it can also help to better manage the cedant’s exposure to catastrophic events or high risks.
Proportional structures also bring an additional level of expertise to cedants by helping them to better manage their risk exposure and improve their underwriting practices.
Additionally, it could help cedants to reduce overall exposure to a single type of risk.
Proportional reinsurance agreements could be less expensive than other types of reinsurance because cedants might retain a bigger proportion of the risks in particular for those with limited financial resources.
It also provides the cedants with additional capacity to underwrite more business and take on larger risks.
[Perrine] : You will choose a non-Proportional structure to:
- Prevent exceptional risks that could have a financial impact on the company.
- but also to manage specific, atypical or unique risks as they are difficult to evaluate.
- And finally to diversify an existing book of business on segment lines that are not currently covered or negligible in the in force portfolio.
[Perrine] : A good example is the Epidemic & pandemic risks: by choosing a non-proportional reinsurance structure (after having carefully determined the capacity or action level at which the Company is involved) the company could set in advance the maximum exposure that is acceptable, and then get a good idea of the costs incurred.
[Bertrand] : Thanks a lot for watching this video.
[Perrine] : Now, you know how to define the appropriate reinsurance structure for your coverage needs.
[Betrand] : Thanks again, and goodbye.
Bye for now 👋
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