1. the nature of reinsurance

7/21/2019 1. the Nature of Reinsurance

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Kbfpter 6

PBE JFPU_E AC _EHJ[U_FJKE

F ihst ac patejthfiiy hjteresthjg weo shtes ac reievfjke ta tbhs oaadH_MH.kam(Hjterjfthajfi _hsd Mfjfgemejt HjsthtuteU.[.)

OHIF.arg.ud(Orhthsb Hjsurfjke Ifw FssakhfthajU.D.)

O_MF.arg(Orader _ehjsurfjke Mfrdet FssakhfthajU.[.)

Ifw.karjeii.eù (Karjeii UjhvershtyU.[.)

Iigm.kam(Ie Oaec IfmoU.[.)

Efifw.kam(E`wfr`s fj` FjgeiiU.[.)

@FK.ka.ud(@fvhes Frjai` Kaaper)

OIG.ka.ud(Ofriaw, Iyè & Ghioert)

ifw-jawNkmkd.kam

HjsurfjkerehjsurfjkeNopifw.kam (Oerwhj Iehgbtaj ^fhsjer)Ajihje`mk.ka.ud

iegfi-èchjhthajs.kam

mfrdetrecarm.ka.ud(Iajàj Mfrdet [ihps, Kajtrfkt Kertfhjty )

HJP_A@UKPHAJPbe fhm ac tbhs oaad hs jat ta tefkb tbe prhjkhpies ac rehjsurfjke fs sukb out ta try ta expifhj fj` ejkaurfge tbaugbt aj tbe iegfiprhjkhpies fppiyhjg ta rehjsurfjke.

Bawever, fs we pragress tbraugb tbhs kbfpter we bape ta expifhj tbe ofshk purpases ac tbe `hccerejt types/styies ac _ehjsurfjkefioeht ht ft f ofshk ieveitbe ètfhi whii oekame mare fppfrejt fs aje revhews war`s use` ta express hjtejt whtbhj `hccerhjg styies acrehjsurfjke kajtrfkt.

Pbhs kbfpter pravhès fj hjtraùkthaj ta tbe text oy out hj ref`hjg tbhs fj` atber kbfpters ht hs hmpartfjt ta rememoer tbft mfjy hssues fre èkhèòy frohtrfthaj. [ukb èkhshajs à jat krefte iegfi prekeèjt fj` fre actej jever reparte` oekfuse ac kajchèjthfihty kifuses. Pbegrawhjg trej` tawfr`s F@_ (fiterjfthve `hspute resaiuthaj) vhf me`hfthaj sbaui` fisa oe oarje hj mhj`.

Xau whii see tbhs symoai hj tbhs oaad ejkaurfghjg yau ta tfde f iegfi thme aut. Kajshèr tbe questhaj ar kfse fsde` ushjg yaur awjiaghk, perbfps f ihttie resefrkb1tbej revhew tbe fjswer ar aphjhaj ghvej. îefse rememoer yau fre ejthtie` ta yaur vhews fs mukb fs

F GUH@E PA _EHJ[U_FJKE IFW - 6st E`hthaj, ?>>7

KBF^PE_ 6 PBE JFPU_E AC _EHJ[U_FJKE

_aoert Merdhj


2/26

fjyaje eise. Pbe hmpartfjt pahjt ac tbese orefds hs ta ejkaurfge yau ta tbhjd ifterfiiy tbraugb tbe iaghk fj` tbe refsajs car tbeèkhshajs mfè.

Aj atber akkfshajs yau whii see tbe kaccee kup symoai. Vuesthajs bere fre mare ta à whtb rehjsurfjke hssuesfgfhj step ofkd fj`

tbhjd tbraugb tbe questhaj fj` tbej ward tbraugb tbe fjswer. Evej aj f ifw kaurse yau mhgbt jee` f kfikuiftar.Wbft caiiaws hs ofse aj tbe futbars extejshve experhejke hj rehjsurfjke fj` exkept wbere spekhchkfiiy hj`hkfte , aphjhajs

expresse` reciekt bhs awj persajfi vhews, jat f spekhchk iegfi aphjhaj.

Iegfi vhews kame cram f rfjge ac saurkespfrthkuifriy hjkiu`hjg7


_aoert Merdhj


3/26

Wby hs ht iegfiiy hmpartfjt fj` beipcui tbft rehjsurfjke oe seej fs hjsurfjke1Pbe cfkt tbft _ehjsurfjke hs ofshkfiiy seej hj kammaj ifw fs hjsurfjke beips hj mfjy iegfi skejfrhasaje kfj revert ofkd ta ofshkhjsurfjke iegfi prhjkhpies fs f stfrthjg pahjt, e.g. utmast gaa` cfhtb. Bawever ht hs fisa hmpartfjt ta rememoer tbft `hccerejt

lurhs`hkthajs mfy kame ta `hccerejt hjterpretfthajs.

Pbe pifkhjg prakess fj` kifrhty ac kajtrfktPbe pifkhjg prakessMfjy ac tbe `hsfgreemejts hj rehjsurfjke stem cram tbe pifkhjg prakess5 fj` ?>>3 vfrhaus hjhthfthves were ujèrtfdej ta ejsure kajtrfkt kertfhjty ft pifkemejt thmesee mfrdetrecarm.ka.ud(àkumejts). Pbese hjkiuè tbe hssuhjg ac!Kajtrfkt kertfhjty

Ghvej tbft f bhgb perkejtfge ac rehjsurfjke hs pifke` ushjg f sihphrrespekthve ac wbft carm ac rehjsurfjke hs oehjg pifke` ht sbauiòe aovhaus tbft f weii-`rfcte` sihp whii ief` ta mukb iess frgumejt hj tbe cuture re tbe hjtejthaj ac tbe pfrthes. Hj f``hthaj ht augbt taief` ta tbe praùkthaj ac f mare fkkurfte war`hjg (wbere jekessfry), whtb hts praùkthaj oehjg prampt! Pbhs ujcartujfteiy bfs jatoeej tbe kfse hj mfjy hjstfjkes hj tbe pfst.

Hj tbe kajtext ac kajtrfkt kertfhjty fj` sihp prepfrfthaj twa very hmpartfjt trej`s sbaui` oe bhgbihgbte`4 tbe M_ (Mfrdet _ecarm)sihp fj` tbe Kaè ac ^rfkthke car Kajtrfkt Kertfhjty (see Fppej`hx1).

Kajtrfkt kertfhjtyKaè ac ^rfkthke kbekd ihstHj Aktaoer ?>>5 f kajtrfkt kertfhjty Kaè ac ^rfkthke fj` supparthjg àkumejtfthaj wfs hssue` whtb tbe fhm tbft tbhs oe shgje` up taft oafr` ievei oy fii memoers ac IMOK, HUF fj` IMF. Pbe mfrdet tfrget wfs ta fkbheve 25% kajtrfkt kertfhj pifkemejts car ;6@ekemoer ?>>3



_aoert Merdhj


4/26

-- esthmfte` 8>% wfs fkbheve` car ;6 @ekemoer ?>>5-- car cuii àkumejtfthaj see mfrdetrecarm.ka.ud

JO< Kajtrfkt kertfhjty hs èchje` fs Kajtrfkt kertfhjty hs fkbheve` oy tbe kampiete fj` chjfi fgreemejt ac fii terms (hjkiu`hjgshgje` àwj tbe ihjes) oetweej tbe (_e)hjsure` fj` tbe (_e)hjsurers oecare hjkepthaj

Cram f iegfi perspekthve f sihp kampiyhjg whtb tbhs èchjhthaj mfy sthii jat oe iegfiiy kertfhjtbhs whii èpej` aj tbe `rfcthjg actbe àkumejt htseic. Kertfhjiy iaadhjg ta tbe cuture tbe tfrget sbaui` oe kajtrfkt qufihty ft pifkemejt thme.

IM^Pbe IM^ kajkept carme` pfrt ac fj averfii fhm ta mfde tbe Iajàj Mfrdet mare ecchkhejt fj` pracesshajfi whtb aje ac hts kare fhmsoehjg ta krefte kajtrfkt kifrhty ft pifkemejt thme. Hj ?>>5 tbhs tfrget wfs kbfjge` ta ref` kajtrfkt kertfhjty. Fitbaugb tbe wbaiemfrdet recarm kajkept hs mukb whèr tbfj lust tbe sihp strukture tbe hjcarmfthaj ghvej oy tbe mfrdet recarm pragrfmme acchke ajbaw f M_ sihp sbaui` oe presejte` fj` wbft ht sbaui` kajtfhj sbaui` oe ac hjterest ta fjyaje stu`yhjg rehjsurfjke fj` rehjsurfjkeifw fs ht pravhès f tempifte car f kiefrer fj` bapecuiiy iegfiiy strajger pifkemejt sihp.

Kajtrfkt kertfhjty whii ajiy kame foaut oy kiefrer, cuiier fj` mare pracesshajfiiy prepfre` sihps ft tbe autset.

Car cuii hjcarmfthaj aj mfrdet recarm see mfrdetrecarm.kam. Car ofkdgrauj`, tbe bef`hjgs ac f M_ sihp fre sbawj hj Fppej`hx6.

JO< Pbe use ac tbe IM^ sihp wfs mfj`fte` oy Iiay`s cram ? Lfjufry ?>>0 (whtb kertfhj spekhchk exkepthajs) whtb hts use fisaoehjg fkthveiy ejkaurfge` oy tbe HUF (Hjterjfthajfi Ujèrwrhthjg Fssakhfthaj ac Iajàj).

Aje spekhchk iegfi hssue hs whtb regfr` ta fj apthajfi bef`hjg< rekar`hjg trfjsmhtthjg fj` starhjg hjcarmfthaj (fj` tbe spekhchktext). Ht hs rekammejè` tbft tbhs chei` oe use` ta fiiaw oraders tbe rhgbt ta `hghtfiiy stare chies fj` èstray tbe pfper vershaj whtbautpfsshjg tbe pfper chie aver ta tbehr kihejt.

êrsajfiiy H waui` hjkiuè tbhs aj my sihps hc H wfs tbe pifkhjg orader OUP `hskuss tbe shtufthaj whtb my iegfi f`vhsar oecarefktufiiy èstrayhjg chies.

Fmajgst atbers>7 tbft f Iiay`s sihp ja iajger bfs ta oe shgje` oy tbe I^[A (Iiay`s âihky [hgjhjg Acchke). F cuii sihp, stfmpe` fj`shgje` oy tbe ujèrwrhters, kfj oe carwfrè` ta tbe kihejt fs tbe tatfi fj` cuii iegfi kajchrmfthaj ac kaverfssumhjg tbft tbhsàkumejtfthaj hs fkkeptfoie ta tbe kihejt fj` hj tbe kaujtry kajkerje`.

Fii whii oe èfit whtb fs yau ward tbraugb tbe oaad, e.g.>7


_aoert Merdhj


5/26

Pbe raie fj` respajshohihthes ac tbe iefèr (see Kbfpter ?).Pbe raie fj` respajshohihthes ac tbe orader (see Kbfpter 2).Wrhttej ihjesshgje` ihjes (see Kbfpter ?).Pbe kaver jatewbft hs hts iegfi vfiue1 (see Kbfpter ?).Pbe pawer ac tbe sihp v. tbe kajtrfkt war`hjg (see Kbfpter ?).

Pbe ofshk carms ac rehjsurfjke

Pa sfve f greft èfi ac repeththaj f cew ac tbe kare terms use` hj rehjsurfjke fre expifhje` hmme`hfteiy. Chrstiy tbree war`s use`reguifriy hj praparthajfi trefty rehjsurfjke hj pfrthkuifr>>,>>>

_etejthaj 6>>,>>>

_ehjsurfjke 8>>,>>>

_etejthaj 6>>,>>> _ehjsurfjke 8>>,>>>6,>>>,>>>

6>% 8>%

^remhum whii oe fiiakfte` ofse` aj tbe fiiakfthaj ac tbe rhsd (6>%8>%)

-- whtb tbe rehjsure` oehjg fiiawe` ta èùkt f pre-fgree` fmaujt ac kammhsshaj ta kaver tbehr fkquhshthaj kasts.

Iasses whii oe fiiakfte` ofse` aj tbe fiiakfthaj ac tbe rhsd (6>%8>%).

(o) Jaj-praparthajfi(Fisa djawj fs exkess ac iass ar R/I)

Pbe ouyhjg ac fj fmaujt ac kaver hj exkess ac f kbasej èùkthoie (actej recerre` ta fs tbe retejthaj ar perbfps evej prhmfryU.[.).



_aoert Merdhj


6/26

Pbe premhum kbfrge` oy rehjsurers car ghvhjg tbe kaver whii oe ofse` aj tbehr perkepthaj ac tbe kbfjke ac f iass ar iasses ta tbepfrthkuifr rehjsurfjke oehjg kajshère`

-- tbere whii jarmfiiy oe ja èùkthaj ac kammhsshaj ta kaver fkquhshthaj kasts.

Iasses whii oe kaiiektfoie ajiy car tbe fmaujt hj exkess ac tbe èùkthoie.

e.g. Cfktarysum hjsure` 6,>>>,>>>

_etejthaj 6>>,>>>

_ehjsurfjke 8>>,>>>

Kaver 8>>,>>>

xs

@eùkthoie 6>>,>>>

Baw waui` tbe caiiawhjg iass oe fiiakfte` aver tbe twa `hccerejt vfrhfthajs1(h) Iass 5>,>>> aj arhghjfi paihky(hh) Iass 0>>,>>> aj arhghjfi paihky

(f) raparthajfi (h)

(o) Jaj-praparthajfi (h)

(f) Oatb iasses whii oe spiht 6>%8>% ofse` aj tbe fiiakfthaj ac tbe rhsd

(h) 5,>>> 05,>>> (hh) 0>,>>> ;3>,>>>

6>% 8>% 6>% 8>%

(o)

(h) Ja kifhm ta tbe rehjsurers (oeiaw tbe èùkthoie)(hh) Kifhm ;>>,>>> aj rehjsurers (0>>,>>>6>>,>>> èùkthoie)

_ehjsurfjke typeshj summfry^raparthajfi

CfkuitfthvePrefty`hccerhjg types (see ifter)

Jaj-praparthajfi

CfkuitfthvePrefty`hccerhjg types (see ifter)

CFKUIPFPHSECfkuitfthve hs tbe efrihest carm ac rehjsurfjke whtb fppfrejt recerejkes ofkd ta tbe 60tb kejtury. Fs firef`y expifhje` cfkuitfthve hsrehjsurfjke ofse` aj hj`hvhùfi accers wbere oatb pfrthes rehjsure` fj` rehjsurers bfve apthajs

-- à jat bfve ta rehjsure

-- à jat bfve ta fkkept-- terms fre cuiiy jegathfoie

Cfkuitfthve kfj oe pifke` oatb praparthajfiiy ar jaj-praparthajfiiy (actej kfiie` Cfk R/I).

[ame ac tbe kare hssues cram f iegfi perspekthve hjkiuè>7


_aoert Merdhj


7/26

-- fj`/ar fs arhghjfi

Mfjy cfkuitfthves fre pifke` fs sihp paihkhes whtb tbe hjtejthaj fj` expektfthaj tbft tbe rehjsurfjke whii caiiaw tbe arhghjfihjsurfjkeofkd ta ofkd. terms sukb fs>6] Iiay`s _ep. H._. ?00). Hjkarparfthajwhiiajiyoe fkbheve` HC

-- tbe term hs germfje ta tbe _/H-- tbe term mfdes sejse-- tbe term hs kajshstejt whtb tbe express terms ac tbe _/H-- tbe term hs fppashte car hjkiushaj hj tbe _/H.

Pbhs hs supparte` oy vfrhaus atber kaurt `ekhshajs. JO< [ukb f pbrfse waui` fimast kertfhjiy jat hjkarparfte ifw ar lurhs`hkthajhjta tbe _/H ehtber.

Wby cfkuitfthve1_efsajs car use ac cfkuitfthve mhgbt hjkiu`e7


_aoert Merdhj


8/26

Ohj`hjg futbarhty ohjèrPbe ujèrwrhthjg pej ta fkkept kertfhj types ac rhsd (fs spekhche`) hs pfsse` cram tbe (re)hjsurers ta fjatber pfrty (kfiie` tbe kaverbaièr), e.g. f praùkhjg orader. Pbe (re)hjsurers fre futamfthkfiiy oauj` wbej tbe kaver baièr fkkepts f rhsd aj tbehr oebfic.

[ukb cfkhihthes kfj oe very kast eccekthve car tbe kaver baièr. Pbey sfve thme, f`mhjhstrfthaj fj` tberecare majey. êrbfps tbeykfj fisa accer taa mukb temptfthaj1

Ohj`hjg futbarhty pifkemejts hjta tbe Iiay`s Mfrdet were mfj`fte` ta cfii whtbhj tbe averfii IM^ (jaw M_[ihp) strukture car fii

ohjèrs whtb fj hjkepthaj `fte ac 6/6/?>>5 fj` ifter. Pbere fre very strhkt ruies re tbe strukture fj` aperfthjg prakeùres ac Ohjèrspfrthkuifriy hj tbe Iiay`s Mfrdet.

@a oatb apej kavers fj` oraders ohjèrs krefte fj fgejky fgreemejt oetweej tbe ghver ac tbe rhsd fj` tbe

(re)hjsurer1Ja.

Pbe apej kaver hs fj fgreemejt oy tbe (re)hjsurer(s) ta fkkept fjy rhsds, whtbhj tbe terms ac tbe frrfjgemejt, HC tbey frekeè`.

Pbe ohj`hjg futbarhty èiegftes pawer ta tbe orader ar atber pfrty ta fkkept rhsds aj oebfic ac tbe (re)hjsurertbus tbeorader whii oe aperfthjg fs fj fgejt ac tbe (re)hjsurer.

Ifstiy7


_aoert Merdhj


9/26

fkkeptfjke ac tbe acc-sihp1Pbe iefèr fj` f ihje sihp1F ihje sihp hs seej fs tbe caiiawhjg mfrdet èiegfthjg futbarhty ta tbe iefèr, krefthjg fj fgejky reifthajsbhp.

Kajtrfkt ac (re)hjsurfjke1F ihje sihp hs seej ta oe f kajtrfkt car(re)hjsurfjke (HC rhsds fre fkkepte` oy tbe iefèr tbey fre futamfthkfiiy kavere`) JAP fkajtrfkt ac (_e)hjsurfjke. Pbhs suotie `hccerejke mefjs tbft ht praofoiy oekames fj ar`hjfry kajtrfkt hj ifw (ouyer oewfre) fj`jat f kajtrfkt ac utmast gaa` cfhtb (BHB Kfsufity fj` Gejerfi It`v. Kbfse Mfjbfttfj Ofjd fj` atbersT?>>6] Iiay`s _ep. H._.

686).

Pbe ruies ac UGC waui` fppiy ta tbe accerhjg ac tbe hj`hvhùfi rhsds ta tbe iefèr(s) out jat (hj gejerfi) ta tbe arhghjfi ihje sihpwbej ht wfs oehjg pifke`, fitbaugb tbere waui` sthii oe f kammaj ifw jee` ta `hskiase ujusufi ceftures ac tbe trfjsfkthaj.

Wbej fre tbe rehjsurers aj rhsd1Wbej tbe acc-sihp hs shgje` oy tbe ief`hjg ujèrwrhter(s) jat wbej tbe ihje sihp hs fkkepte` (@ejoyv. Ejgihsb fj` [katthsb

Mfrhthme Hjs,Pbe Phmes, 63 Mfrkb 6882).

Ujèrwrhthjg fgejkhes/paaisPbese frrfjgemejts wbhkb grfjt pawer ta ujèrwrhters ta put àwj tbehr ihjes aj oebfic ac atber (re)hjsurers sbaui` jat oe kajcuse`whtb ihje sihps. Bere fj ujèrwrhter mfdes fkkeptfjkes aj oebfic ac paai ar ujèrwrhthjg fgejky memoers. Ujèr f ihje sihp, tbeiefèr ar iefèrs fre tfdhjg sbfres car tbemseives fj` car atber pfrthkhpfjts aj tbe ihje sihp.

Cfkuitfthvewbft hs wrajg whtb ht1Cfkuitfthve bfs tbe f`vfjtfge car oatb pfrthes ac oehjg apthajfi, out fisa same very mflar `hsf`vfjtfges

-- very bhgb f`mhjhstrfthajpfrthkuifriy praparthajfi-- pifkemejt jat kertfhj (ja futamfthk kaver)

Hj tbe mh` 62>>s tbe kajkept car tbe praparthajfi trefty wfs èveiape` ta averkame tbese praoiems.

^_AÂ_PHAJFI P_EFPXPbere fre tbree `hccerhjg types ac kajtrfkt, efkb whtb tbehr awj pekuihfrhthes fj` purpases% _ehjsurhjg ;>%

Pbhs waui` oe kfiie` f ;>% Vuatf [bfre Prefty.

Pbe perkejtfge oehjg rehjsure` hs fiwfystbe fmaujt use` ta èskrhoe tbe trefty.

h.e. _etfhj 6>% = Keè 8>% = f 8>% Vuatf [bfre Prefty

_etfhj 3>% = Keè 0>% = f 0>% Vuatf [bfre Prefty

Cfhriy aovhausiy rehjsurers fre jat gahjg ta tfde R% ac every rhsd whtbaut same carm ac averfii majetfry ihmht per rhsd.

Fj exfmpie

Pbe rehjsure` bfs èkhè` ht wfjts ta retfhj 7>% ac every rhsd (whtbhj f pfrthkuifr kifss) out JAP mare tbfj 675,>>> per rhsd

_ehjsurers bfve fgree` ta tfde f mfxhmum ac ;>% ac every rhsd out JAP exkee`hjg (car tbehr sbfre) 75,>>> per rhsd.



_aoert Merdhj


10/26

Pbhs praùkes wbft waui` oe èskrhoe` fs f ;>% Vuatf [bfre Prefty.

Mfxhmum Ihmht car 6>>% V/[ ?5>,>>> per rhsd

-- Mfxhmum Ihmht car V/[ rehjsurers 75,>>> per rhsd (;>% ac ?5>,>>>)-- Mfxhmum Ihmht car tbe rehjsure` 675,>>> per rhsd (7>% ac ?5>,>>>)

Baw `h` tbe rehjsure` kame ta èkhè aj tbhs strukture1

Chrstiy oy èkh`hjg aj f retejthaj per rhsd ac f mfxhmum ac 675,>>> fj` tbej revhewhjg tbehr rhsd prachie ta fskertfhj baw mukbfutamfthk rehjsurfjke per rhsd hs jeeè` hj f``hthajfssumhjg ht wfs prfkthkfi ta pifke tbe fmaujt saugbt.

_etejthajPbe èkhshaj aj tbe retejthaj per rhsd hs aje ac tbe kare èkhshajs hj rehjsurfjke. Ujthi tbe rehjsure` djaws wbft ht kfj fccar` ta deepaj f rhsd ht kfjjat èkhè aj hts rehjsurfjke jee`s ar èshgj hts rehjsurfjke pragrfmme.

Wbft cfktars mhgbt bfve oeej tfdej hjta fkkaujt hj kamhjg ta tbe èkhshaj ta retfhj 675,>>> per rhsd1Pbe kfikuifthaj ac f retejthaj hs jat f prekhse skhejke, jumeraus cfktars kfj oe tfdej hjta fkkaujt. Ht usufiiy ej`s up fs f kampramhseoetweej4

-- Patfi kfphtfi fj` cree reserves-- ^remhum vaiume hj tbe kifss/kifsses oehjg kajshère`-- Mfjfgemejt ftthtuè tawfr`s rhsd-- _ehjsurers ftthtuè (wbetber whtbhj f bfr` mfrdet, sactejhjg mfrdet)-- Perrhtary/iakfthaj-- Kifss/qufihty-- _eguifthaj-- ^rhketerms ac rehjsurfjke

Ht hs passhoie tbft prhke, mfjfgemejt ftthtuè fj` rehjsurers ftthtuè waui` oe ft tbe carecrajt ac fjy èkhshaj.

Car f mare ètfhie` vhew, seeswhssre.kam< @eshgjhjg f _ehjsurfjke ^ragrfmmef prfkthkfi fpprafkb.

Grfè` retejthajsFitbaugb ht hs quhte kammaj hj same mfrdets car hjsurers ta deep f chxe` retejthaj aj every rhsd whtbhj f kifss, hj mfjy kfsesrehjsure`s vfry tbehr retejthaj. Pbhs èkhshaj mhgbt hj praperty car exfmpie oe ofse` aj% V/[Mfxhmum kesshaj car 6>>% V/[ 6>>,>>>

_hsd sum hjsure` Kesshaj (fmaujt ghvej) ta trefty

6>>,>>> ;>,>>> (;>% ac 6>>,>>>)

5>,>>> 65,>>>

0>,>>> 6?,>>>



_aoert Merdhj


11/26

?>,>>> 3,>>>

Baw hs tbe premhum gahjg ta oe spiht1

;>% ac tbe rhsd ta rehjsurers, ;>% ac tbe premhums ta rehjsurers

^remhum (6>>%) Pa quatf sbfre

[H 6>>,>>> Kesshaj ;>,>>> 5>> 65>

[H 5>,>>> Kesshaj 65,>>> ;>> 8>

[H 0>,>>> Kesshaj 6?,>>> 0>> 6?>

[H ?>,>>> Kesshaj 3,>>> ?>> 3>

_ehjsurers fre getthjg ;>% ac efkb rhsd fj` tberecare ;>% ac tbe premhum

OUPKammhsshajFitbaugb premhum hs pfh` pra-rftf ta tbe fmaujt ac rhsd oehjg rehjsure`, tbe rehjsurers fgree ta kammhsshaj oehjg èùkte` oy tberehjsure` oecare pfsshjg tbe premhums ajta tbe rehjsurers ta beip kaver fkquhshthaj kasts ac tbe rehjsure`.

Ht hs tbe rehjsure` wba bfs tbe praùkthaj fj` servhkhjg kasts ac tbe arhghjfi hjsurfjkes JAP tbe rehjsurers.

e.g. Kammhsshaj 0>%

;>% quatf sbfre, kammhsshaj0>%

^remhum (6>>%) Pa quatf sbfre Iess kammhsshaj

0>%

[H 6>>,>>> Kesshaj ;>,>>> 5>> 65> (3>)

[H 5>,>>> Kesshaj 65,>>> ;>> 8> (;3)

[H 0>,>>> Kesshaj 6?,>>> 0>> 6?> (02)

[H ?>,>>> Kesshaj 3,>>> ?>> 3> (?0)

0?> 632

Pbus hc qufrteriy

fkkaujt remhum

0?>

Iess kammhsshaj 632

?5?

Hj tbese exfmpies rehjsurers rekehve ;>% ac efkb rhsd, ;>% ac tbe premhum car efkb rhsdiess 0>% kammhsshaj fj` whii pfy ;>% acfjy iass ujèr tbe paihkhes keè`.

Fitbaugb ht mfy seem shmpie ta mfjy ac yauhc praparthajfi hs jat tatfiiy kiefr ta yau tfde thme aut fj` ward tbraugb tbeexfmpie oeiaw ofse` aj f `hccerejt set at terms fj` sums hjsure`.

3>% Vuatf sbfre, kammhsshaj;>%

^remhum (6>>%) Pa Vuatf [bfre Iess Kammhsshaj ;>%

[H 8>,>>> Kesshaj ;>>

[H 0>,>>> Kesshaj 6>>

[H ?>,>>> Kesshaj 5>[H 6>,>>> Kesshaj ;>

Pbus hc qufrteriy fkkaujt

^remhum

Iess kammhsshaj

3>% Vuatf sbfre, kammhsshaj;>%

^remhum (6>>%) Pa quatf sbfre Iess kammhsshaj ;>%

[H 8>,>>> Kesshaj 50,>>> ;>> 62> (50)



_aoert Merdhj


12/26

[H 0>,>>> Kesshaj ?0,>>> 6>> 3> (62)

[H ?>,>>> Kesshaj 6?,>>> 5> ;> (8)

[H 6>,>>> Kesshaj 3,>>> ;> 62 (5.0)

?22 23.0

Pbus hc qufrteriy

fkkaujt remhum

?22

Iess kammhsshaj (23.0)

?>6.3

Pa summfrhse< premhum fj` kifhms fiiakfthajs ujèr fii carms ac praparthajfi rehjsurfjke fre ofse` frauj` tbe shze ac tbe rhsd fj`baw ht hs fiiakfte` oetweej rehjsure` fj` rehjsurers jat tbe shze ac tbe premhum ar fjy iasses.

Vuatf sbfretbe kajtrfktPa ujèrstfj` tbe wardhjgs ac f quatf sbfre trefty fj` ta f greft extejt fjy ac tbe types ac pra-rftf trefty f revhew acsame ac tbetyphkfi kifusesmfdhjg up f typhkfi trefty war`hjg caiiaw.

Hs tbere f pfrthkuifr arèr hj `rfcthjg f kajtrfkt war`hjg1

Ja, `hccerejt peapie whii prepfre war`hjgs hj f `hccerejt arèr out tbe kare kajtejt stfys shmhifr.

[baui` tbere oe1

Cram f kifrhty vhewpahjtyes. H waui` rekammej` f kajshstejt bause styie wbejever tbhs hs prfkthkfi.

^_EFMOIE

Û_Â[E< Pa estfoihsb whtbaut fjy àuot tbe hèjththes ac tbe pfrthes oetweej wbam tbe Fgreemejt hs mfè fj` hj tbhs exfmpieempbfshse tbe cfkt tbft fii rehjsurers bfve severfi (sepfrfte) ihfohihty

VUAPF [BF_E _EHJ[U_FJKE FG_EEMEJP oetweej FOK HJ[U_FJKE KAM^FJX IHMHPE@ ac Iajàj, Ejgifj` (berehjfcterkfiie` tbe _ehjsure )

fj`

Pbe _ehjsurers wbase jfmes fj` praparthajs fppefr aj tbe fttfkbe` shgjhjg skbeùies efkb car hts awj pfrt fj` jat aje car tbeatber (berehjfcter kfiie` tbe _ehjsurer).

Ht hs hmpartfjt ta rememoer tbft ujiess very spekhchkfiiy stfte` fii pfrthkhpfjts bfve f sepfrfte (severfi) ihfohihty fj` tbft tbehj`hvhùfi fkkeptfjkes fre fii sepfrfte iegfi kajtrfkts whtb tbe rehjsure` evej hc fii kajtfhje` whtbhj aje averfii àkumejt. Pbe war`s

ac tbhs prefmoie lust empbfshse tbhs. [ee fisa tbe severfi ihfohihty kifuse hj tbe shgjhjg skbeùie.

HJPE_E[P KIFU[E

Û_Â[E< Pa estfoihsb% ac fii hjsurfjkes fkkepte` ar

rejewe` oy tbe _ehjsure` hj hts Chre @epfrtmejt aj rhsds shtufte` hj _urhtfjhf fgfhjst `hrekt fj`/ar hj`hrekt fj`/ar kajsequejthfi iass oy Chre fj`/ar

fjy atber perhi kavere` oy tbe _ehjsure`suolekt ta fjy spekhchk exkiushajs hj Frthkie RRup ta f ihmht ac x,xxx,xxx per hjsurfjke car tbe 5>% keè`.

Pbe _ehjsure` fgrees ta retfhj car hts awj fkkaujt tbe ofifjke ac 5>%.

Pbe _ehjsure` sbfii oe tbe saie lu`ge fs ta wbft kajsthtutes fjy aje rhsd.



_aoert Merdhj


13/26

Pbe rehjsure` fgrees ta retfhj car hts awj fkkaujt tbe ofifjke ac 5>% ac fii oushjess. Kfj tbey ouy fjy atber

rehjsurfjkes1Fimast kertfhjiy tbey kfj JAP reùke tbehr sbfre àwj oy curtber praparthajfi rehjsurfjke out waui` oe foie ta pifke _hsd R/Ipratekthjg tbe retejthaj fgfhjst ujexpekte` ifrger hj`hvhùfi iasses fj` pratekt tbe fkkumuifthaj ac iasses oy Kftfstrapbe R/I. Hc tberehjsurer wfjts tbhs retejthaj ta oe tatfiiy ujrehjsure` tbey sbaui` mfde tbhs very kiefr ( Greft Ftifjthkv. Bame(6826) ? I._. ?68).

CAIIAW PBE CA_PUJE[

Û_Â[E< Pa estfoihsb>>) I._. ?0;), e.g. Ifw,Lurhs`hkthaj, Frohtrfthajsee Kbfpters 8 fj` 6>

(0) rehjsurers whii caiiaw tbe settiemejts pravhè` tbey fre whtbhj tbe terms ac tbhs rehjsurfjkePbhs praofoiy àes jatkaver ex-grfthf settiemejts ujiess spekhchkfiiy mejthaje` hj tbe kifusesee Kbfpter 7.

Pbe ihfohihty ac tbe _ehjsurer sbfii kammejke shmuitfjeausiy whtb tbft ac tbe _ehjsure`.

Efkb kesshaj whii oe ac ja iajger ùrfthaj tbfj 6? majtbs pius a`` thme, jat exkee`hjg 62 majtbs hj fii.

Pbhs Fgreemejt sbfii oe aj tbe sfme terms, kifuses fj` kaj`hthajs fs arhghjfi fj` sbfii caiiaw tbe settiemejts fj`/ar fgreemejts ac tbe _ehjsure` hj

fii respekts pravhè` tbey fre whtbhj tbe terms fj` kaj`hthajs ac tbhs Fgreemejt.

Ê_HA@

Û_Â[E< Pa>.>>fm iakfi stfj`fr` thme fj` fppihes ta fii oushjess fttfkbhjg aj ar fcter tbft `fte. Ht hs

kajkiuè` car fj hjèchjhte perha` out ehtber pfrty mfy termhjfte ht oy ghvhjg ; majtbs jathke hj wrhthjg ta tbe atber pfrty ft efkb fjjhversfry `fte4

tbe fjjhversfry `fte sbfii oe regfrè` fs ;6 @ekemoer ac fjy yefr.

@urhjg tbe term ac f jathke ta termhjfte, fj` ujthi hts exphry tbe _ehjsure` sbfii rejew exhsthjg kesshajs fj` tfde jew rhsds hj tbe sfme mfjjer fj` hj

fii respekt fs hc ja sukb jathke bfs oeej ghvej.

[pekhfi kfjkeiifthaj

Ehtber pfrty sbfii bfve tbe rhgbt ta termhjfte tbhs Fgreemejt hmme`hfteiy hc7


_aoert Merdhj


14/26

bfs èshgjfte` tbhs rehjsurfjke4 ar(hh) tbe rehjsurers sekurhty rfthjg cram [tfj`fr` & âars (ar fjy cuture fgejky empiaye` oy tbe rehjsure` car tbe purpase

ac rehjsurfjke sekurhty rfthjg) hs àwjgrfè` ta OOO+ ar oeiaw (ar equhvfiejt cram fjy cuture fgejky, fs ètermhje` oytbe _ehjsure`)

tbe rehjsure` sbfii bfve saie apthaj ta kfjkei tbhs fgreemejt hmme`hfteiy oy ghvhjg jathke hj respekt ac tbe pfrthkhpfthaj ac sukb rehjsurer.

Hj tbe evejt ac tbhs fgreemejt oehjg termhjfte` hj fkkar`fjke whtb tbhs Frthkie tbe ihfohihty ac tbe rehjsurer ujèr kurrejt kesshajs ft tbe `fte actermhjfthaj sbfii kajthjue hj cuii carke ujthi tbehr jfturfi exphry.

Ht hs fgree` tbft tbe rehjsure` sbfii bfve saie `hskrethaj hj fssesshjg tbe foave fj` hj hjvadhjg tbe pravhshajs ac tbhs kifuse.

Wbetber tbhs kifuse ar vfrhfthajs ac ht fre iegfiiy strajg ar kiefr hs f `hccerejt hssueht hs passhoie tbe fjswer hs ja.

ERKIU[HAJ[

Û_Â[E< Pa estfoihsb wbft hs jat kavere` oy tbhs fgreemejt rememoerhjg tbhs hs praparthajfi rehjsurfjke fj` mefjt ta oe fkajtrfkt ofse` aj sbfrhjg rhsds, fkquhshthaj kasts, premhums, iasses, etk.

Kare exkiushajs fre ihdeiy ta cfii hjta tbree oraf` kftegarhes% ac tbe _ehjsurers sbfre ac fii autstfj`hjg iasses fs ft ;6st @ekemoer ac tbe preke`hjg yefr

Efkb Xefr whii oe kiase` ft tbe ej` ac tbe yefr fj` tbe partcaiha trfjscerre` ta tbe jext yefr fs berehj pravhè`.

Fs saaj fs prfkthkfoie, out jat ifter tbfj ; majtbs fcter tbe ej` ac tbe yefr, f partcaiha fkkaujt car tbe yefr hj questhaj sbfii oe `rfwj up fj`

kerthche` oy tbe _ehjsure` fj` f kapy tbereac sejt ta tbe _ehjsurer kajsthtute` hj fkkar`fjke whtb tbe caiiawhjg carmuif% ac tbe Jet ^remhums keè`, iess Prefty Kammhsshaj ta kaver tbe ujexphre` rhsd sthii kurrejt ft ;6st @ekemoer@eoht 8>% ac tbe _ehjsurers sbfre ac fii autstfj`hjg iasses fs ft ;6st @ekemoer.

Hj tbe evejt ac fjy mfterhfi fiterfthaj wbhkb hj tbe aphjhaj ac tbe _ehjsure` rejèrs fjy trfjscer hj fkkar`fjke whtb tbhs F_PHKIE hjequhtfoie

oetweej aje yefr fj` fjatber, tbe _ehjsure` whii eccekt fj fppraprhfte f`lustmejt.

KIFHM[ [EPPIEMEJP KIFU[EKF[B IA[[ÎF

Û_Â[E< Pa estfoihsb7


_aoert Merdhj


20/26

Pbhs kifuse ejsures tbft rehjsurers fre fwfre ac mflar iasses.

Pbe _ehjsure` sbfii f`vhse tbe _ehjsurer fs saaj fs passhoie fcter rekehvhjg jathke tbereac ac fjy kifhm wbhkb hs esthmfte` ta fttfhj ar exkee` xxx,xxx

ta tbe Prefty.

_E[E_SE @EÂ[HP[

^remhum _eserve @epashtstbe rehjsure` retfhjhjg f % ac premhums cram tbe qufrteriy F/K fj` reiefshjg tbhs fmaujt ft f ifter `fte pius f

pre-fgree` fmaujt ac hjterest.

Iass _eserve @epashtstbe rehjsurers cuj`hjg tbe rehjsure`s autstfj`hjg iasses.

Oatb mfy oe saugbt oy f rehjsure` fs f sekurhty reservehj mast kfses tbey fre ajiy ihdeiy ta oe ghvej wbere ht hs f iegfirequhremejt hj tbe rehjsure`s kaujtry ac àmhkhie

JO< Hj tbe U[, car exfmpie, fj hrrevakfoie ietter ac kre`ht mhgbt repifke tbe iass reserve èpasht.

ACC[EP KIFU[E

Û_Â[E< Pa estfoihsb tbe rhgbt ta èùkt cram fjy pfymejt ùe ta tbe atber pfrty fjy fmaujts awe` ta tbem oy tbe atber pfrty.

F `hcchkuit kifuse ta hmpiemejt hc ht hjkiuès tbe war`s ujèrihje` fs ht kfj oe very bfr` ta hmpiemejt aj atber fgreemejts wbhkbmfy oe `hrekt (jat tbraugb f orader) ar tbraugb fjatber orader fj` fre èchjhteiy sepfrfte iegfi kajtrfkts.

Ehtber pfrty mfy ft hts `hskrethaj accset fgfhjst fjy fmaujts f`vhse` ta fj` ùe cram tbe atber pfrty bereujèr fjy fmaujts wbhkb bfve oeejprevhausiy f`vhse` fj` fre ùe ft tbft thme ujèr tbhs ar atber Fgreemejts.

Kifuses kammaj ta oatb praparthajfi fj` jaj-praparthajfiPbe caiiawhjg kifuses ar vfrhfthajs ac tbem fre gahjg ta oe cauj` hj fii tbe vfrhfthajs ac trefty rehjsurfjkewbetber praparthajfi arjaj-praparthajfi sa tbey whii ajiy oe presejte` ajke ujiess tbere fre spekhchk refsajs car hjkiu`hjg eisewbere.

HJ[ÊKPHAJ AC _EKA_@[ KIFU[E

Û_Â[E< Pa mfde kiefr>7


_aoert Merdhj


21/26

kammujhkfthajs (hjkiu`hjg out jat ihmhte` ta jathkes, stftemejts, premhums, returj premhums, kammhsshajs, tfxes, iasses, iass f`lustmejts, expejses,

sfivfges fj` iass settiemejts) reifthjg tbereta sbfii oe trfjsmhtte` ta tbe _ehjsure` ar tbe _ehjsurer tbraugb Getfihje Hjsurfjke Oraders Ihmhte`.

Kertfhj hjterme`hfry kifusespfrthkuifriy tbase hjvaivhjg U.[. àmhkhie` oradersfre ihdeiy ta bfve tbe caiiawhjg pfrfgrfpbhjserte`s (^rhtkbfr` fj` Ofhr`) fj` tberequhremejts ac JFHK (Jfthajfi Fssakhfthaj ac Hjsurfjke Kammhsshajers) ta seed pratekthaj car àmesthk hjsurers.

IFW FJ@ LU_H[@HKPHAJ

Pbhs very hmpartfjt fref bfs oeej averiaade` pfrthkuifriy hj cfkuitfthve fj` hs jaw f spekhchk chei` hj tbe IM^ sihp.

Û_Â[E< Pa estfoihsb tbe ifws ujèr wbhkb fjy `hsfgreemejt foaut tbe cujkthajhjg ac tbhs fgreemejt sbaui` oe kajùkte` fj`wbft lurhs`hkthaj kfj befr tbe kfse

Pbe arhghjfi paihkhes ujèrwrhttej oy tbe _ehjsure` sbfii oe ofse` aj Ejgihsb Ifw fj` Lurhs`hkthaj.

F kifuse tbft tbe futbar chj`s hs mhsujèrstaa` surprhshjgiy reguifriy. Pbe kifuse hj tbhs sekthaj hs ta à wtb hjterpretfthaj fj``hsfgreemejts aver tbe kajtrfkt oetweej tbe (re)hjsure` fj` (re)hjsurers. Ht bfs jatbhjg ta à whtb kaverfge ghvej ujèr tbe kaver fssukb. Iiay`s Memas X;;?7 fj` X;0>3 spekhchkfiiy recer ta tbhs fref.

Wbft à yau tbhjd ac tbe foave kifuse1 @aes ht pratekt fii tbe pfrthes1Ht ajiy èfis whtb f spekhchk hjsurfjke hssue. Ht mfdes ja recerejke ta tbe ofshs ac ifw fj` lurhs`hkthaj hj tbe rehjsurfjke! (Ht hs fiakfi lurhs`hkthaj kifuse.)

F mare kamprebejshve kifuse mhgbt oe fiajg tbe caiiawhjg ihjes4

Pbhs Fgreemejt sbfii oe suolekt ta tbe lurhs`hkthaj ac tbe Bhgb Kaurt ac Lusthke ar hts equhvfiejt hj tbe kaujtry spekhche` hj Htem xx ac tbe [kbeùie

wbhkb sbfii fppiy tbe ifws ac tbe kaujtry spekhche` hj Htem xx ac tbe [kbeùie fs tbe praper ifw ac tbhs Fgreemejt.

Pbe hssues ac ifw fj` lurhs`hkthaj whii oe èfit whtb hj Kbfpter 8car jaw ht sbaui` oe jate` tbft ujiess f kifuse hs (f) hjkiuè`(o) hjkiuè` hj f strajg fj` kiefr spekhchk mfjjer ht hs jat kertfhj tbft tbe ifw fj` lurhs`hkthaj wfjte` oy aje pfrty ar tbe atber whiijekessfrhiy oe fkbheve`.

êrbfps f oetter vershaj ac tbe kifuse kifrhcyhjg baw oatb tbe rehjsurfjke kajtrfkt fj` tbe ujèriyhjg rhsds fre ta oe bfjìe` whtbregfr` ta praper ifw mhgbt ref` ihde tbhshc tbhs hs wbft hs wfjte` oy tbe pfrthes.

Pbhs rehjsurfjke sbfii oe gaverje` oy fj` kajstrue` fkkar`hjg ta Ejgihsb ifw. Fjy frohtrfthaj trhoujfi ar atber Carum, bawever, sbfii kajstrue fjy

terms fj` kaj`hthajs ac tbe arhghjfi hjsurfjke fj` fjy aoihgfthajs èrhvhjg tberecram wbhkb fre ar oekame gaverje` oy same atber ifw, ruie,

prfkthke ar lurhs`hkthaj fs bfvhjg tbe sfme mefjhjg fj`/ar eccekt fs bfs ar waui` oe ghvej ta tbem ujèr sukb ifw, ruie, prfkthke ar lurhs`hkthaj.

Pbe hjkiushaj ac f praper ifw fj` lurhs`hkthaj kifuse mfy fisa hjciuejke baw tbe caiiawhjg kifuse kfj oe hjterprete` fj`hmpiemejte` hj `hccerejt lurhs`hkthajs.

F_OHP_FPHAJ

Û_Â[E< Pa ètermhje>7


_aoert Merdhj


22/26

Whtbhj ;> `fys ac rekehvhjg sukb jathke tbe respajèjt sbfii fppahjt bhs frohtrftar fj` ghve wrhttej jathke tbereac ta tbe kifhmfjt, cfhihjg wbhkb tbe

kifhmfjt mfy fppiy ta tbe fppahjter berehjfcter jfme` ta jamhjfte fj frohtrftar aj oebfic ac tbe respajèjt.

Oecare tbey ejter upaj frohtrfthaj tbe twa frohtrftars sbfii fppahjt f tbhr` frohtrftar. [baui` tbey cfhi ta fppahjt f tbhr` frohtrftar whtbhj ;> `fys ac

tbe fppahjtmejt ac tbe respajèjts frohtrftar tbej ehtber ac tbem ar ehtber ac tbe pfrthes mfy fppiy ta tbe fppahjter car tbe fppahjtmejt ac tbe tbhr`

frohtrftar.

Pbe tbree frohtrftars sbfii èkhè oy mflarhty. Hc ja mflarhty kfj oe refkbe` tbe ver`hkt ac tbe tbhr` frohtrftar sbfii prevfhi.

Pbe tbhr` frohtrftar sbfii fisa fkt fs Kbfhrmfj ac tbe Prhoujfi.

Ujiess tbe pfrthes atberwhse fgree tbe frohtrfthaj trhoujfi sbfii kajshst ac persajs (hjkiu`hjg tbase wba bfve rethre`) whtb jat iess tbfj tej yefrs

experhejke ac hjsurfjke ar rehjsurfjke fs persajs ejgfge` hj tbe hjùstry htseic ar fs ifwyers ar atber pracesshajfi f`vhsers.

Pbe frohtrfthaj trhoujfi sbfii, sa cfr fs hs permhsshoie ujèr tbe ifw fj` prfkthke ac tbe pifke ac frohtrfthaj, bfve pawer ta chx fii prakeùrfi ruies car

tbe bai`hjg ac tbe frohtrfthaj hjkiu`hjg `hskrethajfry pawer ta mfde arèrs fs ta fjy mftters wbhkb ht mfy kajshèr praper hj tbe khrkumstfjkes ac tbe

kfse whtb regfr` ta pief`hjgs, `hskavery, hjspekthaj ac tbe àkumejts, exfmhjfthaj ac whtjesses fj` fjy atber mftter wbftsaever reifthjg ta tbe

kajùkt ac tbe frohtrfthaj fj` mfy rekehve fj` fkt upaj sukb evhèjke wbetber arfi ar wrhttej strhktiy f`mhsshoie ar jat fs ht sbfii hj hts `hskrethaj

tbhjd cht.

Pbe fppahjter sbfii oe tbe Kbfhrmfj car tbe thme oehjg ac F_HF[ (UD) ar hc be hs ujfvfhifoie ar ht hs hjfppraprhfte car bhm ta fkt car fjy refsaj, sukb

persaj fs mfy oe jamhjfte` oy tbe Kammhttee ac tbft F_HF[ (UD). Hc car fjy refsaj sukb persajs èkihje ar fre ujfoie ta fkt, tbej tbe fppahjter

sbfii oe tbe lu`ge ac tbe fppraprhfte Kaurts bfvhjg lurhs`hkthaj ft tbe pifke ac frohtrfthaj.

Fii kasts ac tbe frohtrfthaj sbfii oe ètermhje` oy tbe frohtrfthaj trhoujfi wba mfy, tfdhjg hjta fkkaujt tbe ifw fj` prfkthke ac tbe pifke ac

frohtrfthaj, `hrekt ta fj` oy wbam fj` hj wbft mfjjer tbey sbfii oe pfh`.

Pbe pifke ac frohtrfthaj sbfii oe xxxxxx, xxxxxxx.

Pbe praper ifw ac tbhs Fgreemejt sbfii oe tbe ifw ac xxxxxxxx.

Pbe fwfr` ac tbe frohtrfthaj trhoujfi sbfii oe hj wrhthjg fj` ohj`hjg upaj tbe pfrthes wba kavejfjt ta kfrry aut tbe sfme.

[HGJHJG [KBE@UIE

Pbhs war`hjg whii tbej oe caiiawe` oy f [hgjhjg [kbeùie. Ht hs very kammaj car tbe [hgjhjg [kbeùie ta oe befè` whtb f [everfiIhfohihty Kifuse.

[ESE_FI IHFOHIHPX

Û_Â[E< Pa (re)kajchrm< Efkb rehjsurer hs ajiy ihfoie car tbehr praparthaj ac fjy aoihgfthajs ujèr tbe kajtrfkt JAP tbft ac fjyatber rehjsurer.

Pbe suoskrhohjg _ehjsurers aoihgfthajs ujèr kajtrfkts ac rehjsurfjke ta wbhkb tbey suoskrhoe fre severfi fj` jat lahjt fj` fre ihmhte` saieiy ta tbehr

hj`hvhùfi suoskrhpthajs.

Pbe suoskrhohjg _ehjsurers fre jat respajshoie car tbe suoskrhpthaj ac fjy ka-suoskrhohjg rehjsurer wba car fjy refsaj àes jat sfthscy fii ar pfrt ac

hts aoihgfthajs.

Aje ac tbe kampuisary chei`s hj tbe IM^ sihp hs recerejke ta severfi ihfohihty.

[urpius treftyPbe jext carm ac praparthajfi trefty rehjsurfjkebaw àes ht aperfte1

Wbhist tbe V/[ trefty mefjs ghvhjg fwfy f sbfre ac every rhsd whtbhj tbe ruies ac tbe trefty, tbe surpius bfs f `hccerejt purpase fj`metba` ac aperfthaj.

Pbe surpius hs pravh`hjg futamfthk rehjsurfjke car fjy rhsd tbft hs surpius ta tbe rehjsure`s retejthaj. Fii smfiier rhsds remfhjretfhje` 6>>%.

Bere fgfhj tbe kare èkhshaj hs baw mukb tbe rehjsure` kfj fccar` ta deep aj aje rhsdofse` aj kfphtfi, mfjfgemejt ftthtuè,rehjsurers ftthtuè, terrhtary, iakfthaj, prhke, etk.



_aoert Merdhj


23/26

Ajke tbhs èkhshaj hs mfè, f èkhshaj aj tbe futamfthk kfpfkhty jeeè` ujèr tbe surpius kfj oe mfè.

Prefty ihmht_ehjsurers ihmht tbe fmaujt ac kfpfkhty tbft tbey fre whiihjg ta ghve ta f muithpie ac wbft hs retfhje` fj` ejsure tbere hs f praparthajfireifthajsbhp oetweej wbft hs retfhje` fj` keè`.

Fj exfmpie

_etejthaj per rhsd 675,>>>[eedhjg futamfthk kfpfkhty per rhsd up ta f curtber 6,75>,>>>

Pbe trefty waui` oe èskrhoe` fs f 6> ihje surpius trefty (ihje mefjs retejthaj)

_etejthaj 6> Ihje [urpius Futamfthkfiiy hssue f paihky car

675,>>> Mfx ihmht 6,75>,>>> 6,8?5,>>>

(6> 675,>>> + 675,>>>)

F curtber èkhshaj waui` bfve ta oe mfè oy tbe rehjsure` fs ta wbetber ta seed rehjsurers fgreemejt ta hjtraùkhjg grfè`retejthajs fs mejthaje` efriher (fs tbe rhsd hs seej ta get warse oy tbe ujèrwrhter fs tbe retejthaj èkrefses). Oy èkrefshjg tberetejthaj aj f spekhchk rhsd tbe fmaujt ac futamfthk rehjsurfjke fvfhifoie ujèr tbe surpius trefty èkrefses.

_etejthaj 6> Ihje [urpius Futamfthkfiiy hssue f paihky car

F 675,>>> Mfx ihmht 6,75>,>>> 6,8?5,>>>

O 6>>,>>> 6,>>>,>>> 6,6>>,>>>

C ?5,>>> ?5>,>>> ?75,>>>

Baw waui` yau fiiakfte tbe caiiawhjg rhsds1Pbree rhsds Kftegary O

[um hjsure`

(f) 6>>,>>>(o) 2>>,>>>(k) ?,>>>,>>>

Kftegary O rhsd = _etejthaj ac 6>>,>>>

_etejthaj 6> Ihje [urpius Pbe ofifjke1

(f) 6>>,>>> > >

6>>%

(o) 6>>,>>> 7>>,>>> >

6?.5% 27.5%

(k) 6>>,>>> 6,>>>,>>> 8>>,>>>

5% 5>% 05%

Fs ht hs praparthajfi rehjsurfjke tbe fiiakfthaj ac tbe premhum fj` fjy iasses fre ofse` aj tbe fiiakfthaj ac tbe rhsd htseic fs sbawj hjtbe perkejtfges hj htfihks foave. Hj exfmpie (k) tbe rehjsure` bfs jat gat ejaugb futamfthk trefty kfpfkhty. Pbe rehjsure` hs ihdeiy ta

ejèfvaur ta try ta pifke tbe ofifjke fs cfkuitfthvehj tbhs exfmpie praparthajfiiy.Ht hs passhoie tbft hc tbere fre ejaugb rhsds foave tbe kfpfkhty ac tbe chrst surpius ta lusthcy ht tbft tbe rehjsure` mhgbt seed ta pifke

fjatber Preftyf sekaj` surpius. Hc tbhs wfs tbe kfse tbe phkture waui` iaad sihgbtiy `hccerejt.

_etejthaj 6> Ihje [urpius 65 Ihje [ekaj` [urpius

6>>,>>> > >

6>>%

6>>,>>> 7>>,>>> >

6?.5% 27.5%

6>>,>>> 6,>>>,>>> 8>>,>>>



_aoert Merdhj


24/26

5% 5>% 05%

Pbe sekaj` surpius jarmfiiy ajiy phkds up rhsds fcter f sbfre bfs oeej pifke` whtb tbe chrst surpius fs sbawj foave.

Hj tbe exfmpie foave f 6> ihje chrst surpius fj` f 65 ihje sekaj` bfs oeej use`. Wbetber tbe rehjsure` kfj pifke f sekaj` surpiusfj`, hc sa, car baw mfjy ihjes, whii oe ofse` aj jegathfthajs oetweej rehjsurers fj` rehjsure`.

Cfkuitfthve aoihgftary

Oecare iaadhjg ft fjy spekhchk kifuses fppihkfoie ta f surpius we whii chjhsb iaadhjg ft ^raparthajfi trefty oy kajshèrhjg tbecfkuitfthve aoihgftary trefty (Cfk Aoihg).

Pbe wfy ta ujèrstfj` tbhs frrfjgemejt hs ta see hts thtie fs sepfrfte stftemejts>,>>>

_etejthaj 6> Ihje 6st [ ?>I ?j` [ 6>I Cfk Aoihg Cfk

6>>,>>> 6,>>>,>>> ?,>>>,>>> 6,>>>,>>> >

ar

_etejthaj 6> Ihje 6st [ ?>I ?j` [ 6>I Cfk Aoihg Cfk

6>>,>>> 6,>>>,>>> ?,>>>,>>> > 6,>>>,>>>

Pbe rehjsure` kaui` hj cfkt keè fjy fmaujt oetweej > fj` 6,>>>,>>> ta Cfk Aoihg.

Kfj oe ujihje`!

Ujèr exkepthajfi khrkumstfjkes (f very sact trefty mfrdet) ht mhgbt oe passhoie ta chj` Cfk Aoihgs whtbaut mejthaj ac ihjelust ftrefty IhmhtHj tbhs shtufthaj tbere hs ja reifthajsbhp oetweej tbe retejthaj fj` baw mukb kfj oe rehjsure` ujèr tbe kajtrfkt, lust f

mfxhmum kesshaj per rhsd.Car exfmpie, sum hjsure` 6,655,>>>

_etejthaj 6> Ihje 6st [ ?>I ?j` [ Cfk Aoihg Cfk

5,>>> 5>,>>> 6>>,>>> 6,>>>,>>> >

(Prefty ihmht)

@a yau bfve ta bfve f retejthaj ta mfde kesshajs ta tbe foave trefthes1F retejthaj hs jat hjcerre` hjta f Cfk Aoihg (^baejhx Gejerfi Hjs Ka. ac Greeke [F v. Bfivfjaj Hjs Ka. It`T6825] ? Iiay`s _ep.588) ar fjy atber praparthajfi trefty. Hc tbe rehjsurer expekts tbere ta oe aje, tbhs sbaui` oe mfè very kiefr ft tbe thme ac pifkemejt.Hj fjatber kfse ([fhiv. Cfrex(6885) I._.I._. 663) tbe Kaurt ac Fppefi kammejte` tbft hc tbe rehjsure`s presejtfthaj hs jat kiefr hths up ta tbe rehjsurer ta fsd wbetber f retejthaj fppihes. Bawever, wbere tbere hs recerejke ta ihje ht hs hjcerre` tbft tbere hs fretejthaj. Ihje = retejthaj.

Baw waui` fjy premhum ar iass oe fiiakfte` hj tbe exfmpie hmme`hfteiy foave1[um hjsure` 6,655,>>>Ofse` aj tbe fiiakfthaj ac tbe sum hjsure`

[um hjsure` 6,655,>>>

_etejthaj 6> Ihje 6st [ ?> Ihje ?j` [ Cfk Aoihg



_aoert Merdhj


25/26

5,>>> 5>,>>> 6>>,>>> 6,>>>,>>>

(Prefty Ihmht)

>.0;% 0.;;% 2.33% 23.52%

KAJP_FKP @AKUMEJPFPHAJ, CA_ PBE [U_ÎU[ FJ@ PBE CFKUIPFPHSE AOIHGFPA_X P_EFPX

Fii tbe kifuses revhewe` foave ujèr tbe V/[ waui` oe cauj` hj f trefty war`hjg car ehtber surpius ar Cfk Aoihg. Pbe ajiy kifuse tbft

waui` oe `hccerejt waui` oe tbe rehjsurhjg kifuseexpifhjhjg baw tbe trefty aperftes.APBE_ _AÂ_PHAJFI H[[UE[

Vuatf sbfre fs weii fs surpius1

Wbhist ht hs kammaj ta bfve ajiy f quatf sbfre ar ajiy surpius(es), ht hs passhoie ta bfve f praparthajfi trefty pragrfmme whtb oatbquatf sbfre fj` surpius(es) hj kajlujkthaj.

^MI fj` pra-rftf trefthes1

Fitbaugb tbe exfmpies ghvej foave bfve oeej ofse` aj tbe sum hjsure` ([H) ac efkb rhsdhc tbe rehjsure` aperftes aj f ^MI(praofoie mfxhmum iass) ar equhvfiejt ofshs fj` rehjsurers whii fgree, tbe trefthes kaui` oe pifke` ofse` aj tbe rehjsure`s ^MIfssessmejts.

Fj exfmpie

_etejthaj 5 Ihje [urpius

6,>>>,>>> MI 5,>>>,>>> MI

_hsd [H 6?,>>>,>>>

^MI ?5%

Baw waui` tbe rhsd, premhum fj` fjy iasses oe fiiakfte` hj tbhs exfmpie1Chrst, reùke tbe [H àwj oy tbe ^MI 6?,>>>,>>> ?5% = ;,>>>,>>>

Pbej, tbhjd praparthajfi fiiakfthaj ac tbe rhsd ^MI = ;,>>>,>>>

_etejthaj 5 Ihje [urpius

6,>>>,>>> MI ?,>>>,>>> MI

;;.;;% 33.37%

^remhum fj` kifhms waui` oe fiiakfte` ;;.;;%/33.37%.

Out wbft hc tbe ^MI hs wrajg1Iass ac 3,>>>,>>>Baw hs tbe iass fiiakfte`1

;;.;;% 33.37%

?,>>>,>>> 0,>>>,>>>

Pbe iass waui` sthii oe fiiakfte` ofse` aj tbe spiht ac kesshaj ;;.;;%33.37%tbe cfkt tbft tbe ^MI hs wrajg hs lustujcartujftetbe trefty wfs accere` ta rehjsurers aj f ^MI ofshs fj` tbey fkkepte` ht, djawhjg tbere kaui` oe ^MI cfhiure.

[ame trefthes jaw hjkiuè spekhchk kifuses ihmhthjg rehjsurers expasure hc tbe ^MI cfhiure hs taa greft.

^MI kifuse

(Ihmhtfthaj ac ihfohihty wbere fj esthmfte` ^MI hs exkeeè`)

(6) Pbe rehjsurfjke hs ofse` aj tbe ^raofoie Mfxhmum Iass (^MI). Wbej chxhjg tbe ^MI ac fjy rhsd tbe ke`hjg kampfjy sbfii fkt fs pruèjtiy fj`

kfrecuiiy fs passhoie.

(?) Hc hj tbe kfse ac f iass akkurrejke tbe ^MI carmhjg tbe rehjsurfjke ofshs car f spekhchk rhsd praves ta oe taa iaw, tbe f``hthajfi ihfohihty ac tbe

rehjsurers sbfii oe ihmhte` ta f curtber 5>% ac tbe fmaujt ac tbe ^MI.



_aoert Merdhj


26/26

Pbhs pravhshaj sbfii jat fppiy4

--ta iasses kfuse` oy krfsbhjg fhrkrfct--hj kfse ac kajkurrejt frsaj hj severfi, spfthfiiy sepfrfte` frefs whtbhj aje rhsd

--tbese fre ta oe trefte` fs sepfrfte iass akkurrejkes ujèr tbe kifuse

--hj kfses wbere tbe ^MI hs exkeeè` fs f resuit ac tbe esthmfte jat bfvhjg tfdej hjta fkkaujt `hsfster-ihde evejts reifte`jehtber `hrektiy jar hj`hrektiy ta tbe rhsd hjsure`.

Pbhs pravhshaj sbfii averrhè fjy atber kifuse ar kaj`hthaj ac tbe trefty fj`, hj pfrthkuifr, tbe errars fj` amhsshajs kifuse.

FGG_EGFPE IHMHP[ UJ@E_ ^_AÂ_PHAJFI P_EFPHE[

Fjatber hssue pfrthkuifriy hj f bfr` mfrdet hs wbere rehjsurers hmpase averfii ihmhts hj tbe evejt ac f kftfstrapbe. Hc ja fggregfteihmht hs hmpase`>0 Kfrhooefj Burrhkfjes, Kbfriey, Crfjkes, Hvfj fj` Lefjje.

Fj exfmpie ac f kifuse sbawhjg baw ht mhgbt ward hs fs caiiaws>7


1. the nature of reinsurance

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