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Reinsurance Program Considerations

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Questions and Answers

What is the purpose of a reinsurance program?

To eliminate all risk for the ceding company

To take over all the risk from the ceding company

To support the ceding company for the portion of risk they cannot handle (correct)

To compete with the ceding company in risk management

Why is there no typical (ideal) reinsurance program?

Regulatory authorities prohibit standard reinsurance programs

Insurance companies do not require reinsurance programs

The reinsurer determines the structure of the reinsurance program

Each company's situation regarding loss exposure and financial solidity is unique (correct)

What does a typical reinsurance program involve?

A combination of several methods of protection (correct)

An exclusive focus on excess of loss reinsurance

A complete transfer of risk to the reinsurer

A single reinsurance type such as quota share or surplus

What does a reinsurance program consist of?

A combination of ceded reinsurance covers tailor-made for the company Signup and view all the answers

What determines the need for a unique reinsurance program for each company?

Loss exposure, financial solidity, management culture, future plans, and marketing opportunities Signup and view all the answers

In a Quota Share-Surplus Method, what protects the reinsured's retention under the surplus treaty?

Underlying Quota Share arrangement Signup and view all the answers

What happens as the cedant grows in business and starts to write large volumes in a Quota Share-Surplus Method?

Reinsurer's share of the quota share is gradually reduced Signup and view all the answers

What must be true about participating reinsurers in a Quota Share-Surplus Method?

They must be the same across both treaties Signup and view all the answers

How is the capacity of the surplus expressed in a Quota Share-Surplus Method?

As a multiple of the gross retention Signup and view all the answers

In a Quota Share-Surplus Method, when does the use of Quota Share come into play?

Before the surplus Signup and view all the answers