Underwriting in Reinsurance
Underwriting in reinsurance is not only the coordination of the price and terms of reinsurance of a particular risk or contract today, but also control over the overall state of your portfolio in a temporal and spatial sense. Underwriting in reinsurance includes a system of the following activities: a serious preliminary risk study ( extensive risk assessment ); specification of tariffication (more sophisticated premium rating ); creation, if necessary, of new services for settlement of claims and risk management and conclusion of more binding contractual (agency) agreements with brokers.
The purpose of these events is to provide underwriters of the reinsurer the opportunity to allocate quality risks and more accurately to their tariff.
Reinsurers may review the terms of reinsurance contracts, exclude certain losses and stipulate the use by the reinsurer of a set of certain, and very rigidly defined rules for conducting business, introduce direct exceptions to certain risks in the form of separate reinsurance treaty clauses, for example exclusive jurisdiction clauses that are not can be challenged ( incontrovertible exclusive jurisdiction clauses ).
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If the underwriter wants to accept international property risk in reinsurance, but at the same time exclude the risk of civil unrest, he must include in the reinsurance contract a full exclusion clause , which clearly demonstrates the difference between insurance contracts and reinsurance.
Developers of reinsurance contracts concentrate their efforts on the following points:
1) the inclusion of clear reservations about applicable law and exclusive legal clauses;
2) a clear definition of covered risks and a detailed list of exceptions;
3) study of foreign law and insurance and reinsurance regulation in order to find out that reinsurers can not fall victim to the provisions of the legislation of other countries;4) the introduction of reservations on the control of settlement of claims and the stipulation of procedures for the settlement of losses, by determining, in accessible terms, the obligations of the reinsurer and the consequences of their non-compliance, as well as the introduction of mechanisms for the settlement of losses and risk management under original treaties, to preserve evidence and securing the right to subrogation.
In obligatory reinsurance, standard underwriting is usually applied, and the main attention is drawn to the compliance of slip and brodero conditions with the terms of the obligatory reinsurance contract. However, the conclusion of a reinsurance contract is preceded by a thorough and mutual financial and reputation underwriting partners.
In cases when the term of the reinsurance (retrocession) directly in its text is not specified, usually the date of its conclusion is the date of the reinsurer's signing of the reinsurer's offer, and the date of termination of the validity is the date of termination of the main insurance contract, co-insurance or facultative reinsurance .
If the offer does not specify any of the above conditions, but the reinsurer accepts it, then it does not have the right to refer to the absence of the relevant terms in the contract, as it is considered that the parties did not recognize the missing conditions as essential./p>
In optional reinsurance, individual underwriting is used both for the conditions of the reinsurance contract and, first of all, for the primary risk (with possible participation of underwriters of the reinsurer) if its parameters deviate from the average for the reinsurer.
When transferring risks to reinsurance, the reinsurer is obliged to provide the reinsurer with all necessary information on the risk offered to reinsurance, as well as documents on his financial position, licenses, insurance rules, etc., at the request of the reinsurer.
The acceptance of the offer must be notified in writing to the other party within the term of its validity. In this way, the parties acknowledge the direction of the offer to the reinsurer (reinsurer) by facsimile or e-mail of an offer signed by a representative of the reinsurer and certified by its seal.
If a decision is made to refuse to accept a risk in reinsurance (retrocession), the reinsurer sends a written notification to the reinsurer, and he may not explain the reasons for his decision. The absence of a response within the term of the offer is considered a refusal to accept the risk in reinsurance.
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The reinsurer is obliged to inform the reinsurer about all changes in the insurance object and in other circumstances that may affect the increase in the level of the risk of paying the insurance indemnity within a period specified by the reinsurance contract (usually no later than three working days from the day when it became aware of it) or insurance sum under the basic contract of insurance, co-insurance or reinsurance. The obligations of the reinsurer can not arise before the occurrence of the obligations of the reinsurer.
In a contract of facultative reinsurance, conditions may be provided that restrict a reinsurer in accepting insurance liabilities entirely or in a certain part.
The reinsurer's obligations for payment of insurance compensation to the reinsurer in connection with his legitimate payments of insurance compensation or the insured amount under the main contract of insurance, co-insurance or reinsurance during the validity period of the optional reinsurance contract (retrocession) do not cease upon expiry of the term of the latter, but continue before settlement of all issues under this agreement or within the period stipulated by the parties, unless otherwise agreed by the parties.
The volume of reinsurance obligations (liabilities) of the reinsurer is determined by the contract of facultative reinsurance (retrocession) and can not be changed, except by agreement of the parties, except for cases when the reinsurer deliberately introduces deception.
During the examination the following documents of the reinsurer are examined.
1. Documents included in the dossier of the relevant main insurance contract, and all additional agreements to it.
2. Documents included in the dossier on insurance payments.
3. Accounting documents that contain information about this risk or risk portfolio.
4. Accounting reports.
5. The constituent documents of the reinsurer.
6. Documents related to the underwriter's policy of the reinsurer.
In foreign practice of reinsurance, for example, in the practice of the corporation "Lloyd", the reinsurance broker prepares these documents in advance and brings the risk to the quotation with already prepared answers.
1. A significant risk in the work of an insurance company is the loss of solvency and the inability to pay its obligations. To reduce this risk, the Russian legislation establishes the need for insurers, among other methods, to reinsure.
2. Reinsurance relations are regulated by the general insurance legislation and customs of business turnover. One of the important conditions for this relationship is to follow the fate of the original risk.
3. Relationship to the principle of & quot; follow the fate of the original risk & quot; varies depending on the type of reinsurance protection. In obligatory reinsurance, this principle is de facto, since the reinsurer does not have the ability to check all the original risks and, having chosen the reinsurer as a result of thorough financial underwriting, trusts him. In facultative reinsurance, the reinsurer is free to take risks into reinsurance. He has the opportunity and the need to participate in the underwriting of the original risk, the formation of conditions for its insurance and settlement of losses.
4. When transferring risks to reinsurance, the reinsurer is required to provide the reinsurer with all necessary information on the risk offered to reinsurance, as well as documents on his financial position, licenses, insurance rules, etc., at the request of the reinsurer.
5. Underwriting in reinsurance is a system of measures involving a serious mutual preliminary study of the reinsurer and reinsurer, full participation in underwriting and management of the original risk in facultative reinsurance and concluding clear and binding brokerage and reinsurance contracts for the parties.
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