-
Reins vs primary ins
- reins pgm more tailored to the buyer
- pricing paradox: if you can precisely price a contract, the ceding cpy will not want to buy it
-
Types of proportional insurance
- quota share
- surplus share
- fixed and variable quota share arrangements on XS business
-
Special features of proportional treaties
- sliding scale commission
- profit commission
- loss corridors
-
Sliding scale commission
- % of P paid by reinsr to ceding cpy slides w actual experience subject to min / max
- balanced plan: you can just take % associated w ELR
- simple approach: use hist LR adj to future level
- (-) may be distorted by hist cat or yrs w low P level
- carryforward provision:
- (1) include carryforward from past yrs and estimate impact on current yr only
- (-) ignores potential carryforward beyond current yr
- (2) long run
- (+) var of dist reduced
- (-) method for reducing var not obvious
- (-) fail to consider p(not renewing)
-
Profit commission
- substract actual loss, ceding commission & margin for expenses from the treaty premium and returns a % of this as additional commission
- like sliding scale, ambiguity concerning carryforward
-
Loss corridors
- ceding cpy will reassume a portion of reinsr's liability if loss ratio exceeds a certain amt
- estimate impact w aggregate loss dist
-
Advantages of exposure rating
- current profile is modeled
- Salzmann centers on an exposure curve
- treaty P = P[(R+L) / IV] - P[R / IV]
- curve allows for exposure above IV due to addl covg
-
Issues on property per risk treaties
- free cover if no loss trends into higher layers. Use experience rating for lower, relativities for higher
- credibitlity method: exp claims, annual variation in loss cost
- inuring reinsurance: in experience rating, restate hist loss experience; in exposure rating, select curve based on loss net of inuring, but exposure factor applied to surplus share after
-
Casualty per occurence excess treaties
- working layer: low layer attachment expected to be penetrated several times
- exposed excess: attaches below some policy limits but penetrated less frequently
- clash cover: high attachment not penetrated by single policy loss
-
Loss sensitive features
- annual aggreegate deductible
- swing plan
- (-) plan not in balance due to min / max rate
- (-) provisional rate may be well below exp ult premium
|
|