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The reinsurance sold refers to the part of the risk that a general insurer will hand over to a reinsurer. It allows the non-insurer to reduce its exposure to an insurance policy it has taken out by transferring that risk to another company. Direct insurers are also referred to as a divested business, while the reinsurance company is also referred to as a reinsurance business. In return for risk management, the reinsurance company receives a premium and pays the debt for the risk taken into account. Because the CCRIF uses what is known as parametric insurance to calculate claims, claims are paid quickly. In the context of a parametric system, claims are caused by the appearance of a particular event that can be verified objectively. B for example, a hurricane reaching a certain wind speed or an earthquake reaching a certain ground shaking threshold, and not by actual losses measured by a presenter, a process that can take months. Types of reinsurance: reinsurance can be subdivided into two basic categories: contract and option. Contracts are agreements covering large groups of policies, such as all the automotive activities of an automatic insurer. As an option, some individual risks, usually high quality or dangerous, such as . B a hospital, would not be accepted by a contract. In a surplus agreement, also known as “non-proportional reinsurance,” the insurer that has divested retains some liability in the event of a loss. It pays the reinsurance company a fee covering an amount greater than that deduction, and this insurance coverage is generally subject to a fixed limit.

Overruns in claims agreements are often more economical in terms of reinsurance premiums and administrative costs. For many years, few people outside the insurance industry knew that there was a mechanism such as reinsurance. The public was first introduced into reinsurance in the mid-1980s, when the liability crisis is now known. The lack of reinsurance has been widely considered to be one of the factors contributing to the availability problems and the high prices of different types of liability insurance. A few years later, in 1989, reinsurance activity became a problem outside the insurance industry when Congress examined the bankruptcies of several major property/accident insurers. Another recent innovation is the sidecar. These are relatively simple agreements that allow a reinsurer to transfer a limited and specific risk over a period of time to another reinsurer or group of investors, such as hedge funds, such as the risk of an earthquake or hurricane in a given geographic area. Sidecars are much smaller and less complex than disaster bonds and are generally placed privately instead of tradable securities. In the case of ancillary vehicles, investors share with the reinsurer the profit or loss of the transaction. While a disaster loan could result in a surplus of reinsurance-loss when you consider the higher levels of losses for a rare but potentially very destructive event, side cars are similar to reinsurance contracts in which reinsurers and direct insurers participate in the results. Catastrophe Bonds and Other Alternative Risk Financing Tools: The lack and high cost of reinsurance in the event of a traditional disaster caused by Hurricane Andrew and the lower interest rates sent by investors seeking higher returns have sparked interest in securitization of insurance risk. Among the forerunners of so-called real securitization, there are contingency bonds such as those issued in 1996 for the Florida Windstorm Association, which provided money in the event of a disaster but had to be repaid after a loss, and conditional surplus bonds – an agreement with a bank or other lender that, in the event of a major disaster that would significantly reduce the policyholders` surplus, would be made available at a predetermined price.

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