Insurance WAEC

Re-Insurance

Resumen

Who insures the insurer? When a Lagos company accepts a fire risk on a ₦2 billion refinery, it cannot afford to pay that claim alone if the plant burns down. So it does exactly what its own customers do: it passes part of the risk to someone bigger. That someone is a reinsurer, and the arrangement is called re-insurance, the quiet machinery that lets ordinary insurers safely accept risks far larger than their own pockets.

In this lesson you will learn what re-insurance really is and how it moves risk from one insurer to another, the difference between facultative and treaty cover, and how a single risk is carved up under quota share and surplus treaties. You will work through the splits examiners set, see why re-insurance is not the same thing as co-insurance, and meet the reinsurers that keep the Nigerian market standing.

Objetivos

  1. Define re-insurance and explain how it transfers risk from one insurer to another
  2. Distinguish facultative from treaty re-insurance
  3. Explain the functions of re-insurance, including capacity, stability and catastrophe protection
  4. Describe the uses of re-insurance in the Nigerian insurance market
  5. Distinguish re-insurance from co-insurance

Mapa mental

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Tarjetas

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Nota de la lección

A medium sized insurer in Port Harcourt is asked to cover an oil storage depot for ₦900,000,000. Its entire capital could not settle a total loss of that size, yet it does not want to turn the business away. The way out is re-insurance: the insurer accepts the whole risk to keep the client, then immediately passes most of it to a reinsurer. Master this one idea and you understand how a small company can safely write a giant risk, why insurers rarely collapse after a single disaster, and how the Nigerian market keeps premium income at home.

Evaluación de la lección

Felicitaciones por completar la lección del Re-Insurance. Ahora que has explorado el conceptos e ideas clave, es hora de poner a prueba tus conocimientos. Esta sección ofrece una variedad de prácticas Preguntas diseñadas para reforzar su comprensión y ayudarle a evaluar su comprensión del material.

Te encontrarás con una variedad de tipos de preguntas, incluyendo preguntas de opción múltiple, preguntas de respuesta corta y preguntas de ensayo. Cada pregunta está cuidadosamente diseñada para evaluar diferentes aspectos de tu conocimiento y habilidades de pensamiento crítico.

Utiliza esta sección de evaluación como una oportunidad para reforzar tu comprensión del tema e identificar cualquier área en la que puedas necesitar un estudio adicional. No te desanimes por los desafíos que encuentres; en su lugar, míralos como oportunidades para el crecimiento y la mejora.

  1. Re-insurance is best described as: A. The sharing of one risk among several insurers who all face the insured B. The transfer by an insurer of part of a risk it has accepted to another insurer C. The payment of a claim by instalments D. Insurance taken out by a member of the public Answer: B
  2. In a re-insurance transaction, the insurer that passes on the risk is known as the: A. Reinsurer B. Ceding company C. Retrocessionaire D. Lead insurer Answer: B
  3. An insurer holds a 30 per cent retention, 70 per cent cession quota share treaty. On a claim of 20,000,000 naira, how much does the reinsurer pay? A. 6,000,000 naira B. 14,000,000 naira C. 20,000,000 naira D. 7,000,000 naira Answer: B
  4. Which type of re-insurance is obligatory, so that the insurer must cede and the reinsurer must accept every qualifying risk automatically? A. Facultative B. Treaty C. Retrocession D. Co-insurance Answer: B
  5. The process by which a reinsurer re-insures part of a risk it has accepted with another reinsurer is called: A. Retention B. Co-insurance C. Retrocession D. Subrogation Answer: C

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Fundamentals of Risk and Insurance
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Fundamentals of Insurance
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Editorial: Himalaya Publishing House
Año: 2017
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Descripción: An accessible treatment of insurance in four parts: the basics of risk, insurance management, life insurance and non-life insurance.

Preguntas de repaso

¿Te preguntas cómo son las preguntas anteriores sobre este tema? Aquí tienes una serie de preguntas sobre Re-Insurance de años anteriores.

WAEC SSCE - Insurance - 2015

Pregunta 1 Informe

Explain the following terms as used in insurance.

(a) re-insurance

(b) Loss adjusters

(c) underwriters

(d) brokers

(e) assessor

 

Detalles de la respuesta

Meaning of the terms as used in insurance:

  1. Re-insurance: This is an arrangement whereby an insurance company transfers part of the risk it has accepted to another insurance company. It helps to spread risks and protects the insurer from very large losses.
  2. Loss adjusters: These are claims specialists appointed by insurance companies to investigate losses, determine the cause and extent of damage, establish whether the insurer is liable and recommend the amount payable as compensation.
  3. Underwriters: These are individuals or companies that assess risks proposed for insurance. They decide whether to accept or reject the risk and, where accepted, determine the premium, terms and conditions of the policy.
  4. Brokers: These are independent insurance intermediaries who act mainly on behalf of the insured. They advise clients on suitable insurance policies, obtain cover from insurance companies and assist clients in placing and negotiating claims.
  5. Assessor: This is a person who examines insured property or damage to it in order to estimate its value or the extent of loss. The assessor helps in determining the amount of compensation or claim due to the insured.
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