Re-Insurance

Overzicht

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.

Doelstellingen

  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

Lesnotitie

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.

Lesevaluatie

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Je zult een mix van vraagtypen tegenkomen, waaronder meerkeuzevragen, korte antwoordvragen en essayvragen. Elke vraag is zorgvuldig samengesteld om verschillende aspecten van je kennis en kritisch denkvermogen te beoordelen.

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  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

Aanbevolen Boeken

Principles of Risk Management and Insurance
Principles of Risk Management and Insurance
Ondertitel: Thirteenth edition
Uitgever: Pearson
Jaar: 2016
ISBN: 978-0-13-408257-8
Beschrijving: The standard introduction to risk and insurance, covering risk management, insurer operations and the main lines of life, health, property and liability cover.
Fundamentals of Risk and Insurance
Fundamentals of Risk and Insurance
Ondertitel: Tenth edition
Uitgever: Wiley
Jaar: 2008
ISBN: 978-0-470-08753-4
Beschrijving: A clear account of the nature of risk and the economics of insurance, written for beginning students across life, health, property and liability insurance.
Fundamentals of Insurance
Fundamentals of Insurance
Ondertitel: Second edition
Uitgever: Himalaya Publishing House
Jaar: 2017
ISBN: 978-93-5097-079-9
Beschrijving: An accessible treatment of insurance in four parts: the basics of risk, insurance management, life insurance and non-life insurance.

Eerdere Vragen

Benieuwd hoe eerdere vragen over dit onderwerp eruitzien? Hier zijn een aantal vragen over Re-Insurance van voorgaande jaren.

WAEC SSCE - Insurance - 2015

Vraag 1 Verslag

Explain the following terms as used in insurance.

(a) re-insurance

(b) Loss adjusters

(c) underwriters

(d) brokers

(e) assessor

 

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