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Definition §
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The trans action whereby the Reins urer, for a cons ideration, agrees to indemnify the Company agains t all or part of the los s the Company may s us tain under the policy or policies it has is s ued As urans i kembali ris iko yang diterima as uradur kepada reas uradur baik s ebagian maupun s eluruhnya Suatu as urans i untuk as uradur/ underwriter atas kerugian bes ar yang mungkin diderita dari pekerjaan operas ional as uradur ters ebut, dan s uatu cara pengalihan s ebagian liability yang diterima as uradur dari tertanggung, kepada reas uradur
Reins urance is an ins urer’s RISK MANAG EMENT DEVICE → Risk Transfer Mechanism for Insurer
2
Role of Reinsurance Micro Level
q
q
Akseptasi risiko yang melebihi kapasitas keuangan perusahaan asuransi
q
Perlindungan risiko katastropik
q
Stabilisasi keuangan/ hasil underwriting perusahaan asuransi
q
Provide a specific economic advantage (dalam bentuk Komisi Reasuransi)
q
Membantu permasalahan regulasi terkait Solvabilitas Macro Level
q
q
Meningkatkan keamanan pemegang polis (tertanggung) & stabilitas jangka panjang industri asuransi
q
Membantu kebutuhan akseptasi mega size risks
q
Pengembangan produk baru
q
Membantu peningkatan insurance knowledge & expertise
3
SELLERS & BUYERS OF REINSURANCE q
Profes s ional reins urance companies (do not trans act primary insurance) → domestic, international, llyods syndicate, etc
q
Ins urance companies (through their reins urance dept)
q
Reins urance pools
q
Captive reins urer
Reins urer bis a mereas urans ikan kembali s ebagian dari ris iko yang diterimanya dari As uradur q
Trans aks i ini dis ebut retrocession
q
Pemberi bis nis dalam trans aks i ini dis ebut retrocedant
q
Penerima bis ns i dis ebut retrocessionaire
4
METHODs of reinsurance Proportional
q
q
Esensi: terdapat pembagian (sharing) original risk antara asuradur dgn reasuradur secara proporsional
q
Proporsi risk sharing digunakan untuk membagi premium & loss yg terjadi
q
the act of reinsuring a risk → cede
q
the unit of insurance ceded → cession
q
the one who cedes → cedant
5
Methods of reinsurance Non Proportional
q
q
Tidak ada risk sharing, premium maupun losses secara proporsional
q
Reinsured menanggung kerugian sampai dengan batas nilai tertentu
q
Reinsurer akan menanggung nilai kerugian yg melebihi tanggung reinsured, sampai dengan limit tertentu
q
Reinsurer mendapatkan sebagian dari total premi protected portfolio
q
Perusahaan asuransi dalam hal ini disebut reinsured
Baik metode Proportional maupun Non Proportional, reasuransi dapat ditempatkan mekanisme Treaty atau Facultative
6
Methods of reinsurance Treaty
q
q
legally binding agreement between reinsured and reinsurer
q
standing facility providing automatic capacity
q
proportional treaty normally long-term contracts
q
q
q
cedant wajib memberikan sesi risiko yg sesuai dengan treaty terms, & reinsurer wajib menerima sesi risiko tsb pada umumnya, tidak ada batasan jumlah risiko yang bisa disesikan ke dalam treaty; dan pada umumnya tidak ada batasan jumlah (frekuensi) kerugian yang dapat di-recover dari reasuradur
q
Nilai sesi risiko dibatasi dengan limit treaty
q
non proportional treaty usually annual contracts & ‘vertical coverage’
7
Methods of reinsurance Facultative
q
q
q
q
Penempatan reasuransi untuk individual risk atau yg bersifat kasus per kasus Sifatnya optional (kebebasan) baik bagi asuradur maupun reasuradur Penempatan ini biasanya diperlukan untuk risiko yg tergolong beyond capacity of the treaty
8
Methods of reinsurance q
Proportional Treaty
Karakteristik: q
Detail risiko/ kerugian tidak dilaporkan kepada reasuradur, tapi untuk treaty dengan volume/ portofolio kecil atau utk COB tertentu (specialised classed) biasanya terdapat pelaporan dalam bentuk bordereaux
q
Obligatory by nature
q
Long-term arrangements & for an unlimited period (unless cancelled)
q
Applies to the entire business of a class written by the cedant
q
Reinsurer gives commission on the premium ceded
q
Amounts payable (premiums/losses) are settled through periodic accounts
9
METHODS OF REINSURANCE Proportional Treaty - Advantages
q
q
Less administration (compare to facultative)
q
Automatic underwriting capacity
q
Relationship with reinsurer developed (due to long-term nature)
q
Commissions (both RIC & PC) as additional income for cedant
Proportional Treaty – Dis advantages
q
q
Giving away substantial premium to reinsurer
q
Reduction in Terms & cancellation due to bad results for a number of years
q
Approval of the reinsurer may be requried for changes in underwriting policy
Types of Proportional Treaty: Quota Share; Surplus; Facultative Obligatory
10
METHODS OF REINSURANCE Non Proportional Treaty
q
q
Reinsurer is liable only for losses in excess of agreed amount (priority/ deductible/ underlying retention/ attachment point) and up to a limit
q
The amount up to which the reinsurer is liable → limit/ cover/ security
q
Examples??
q
Premium?? q
amount or rate to be applied to the premium of ‘protected portfolio’, to reflect the loss expectancy transferred
11
METHODS OF REINSURANCE Proportional Facultative
q
q
Penempatan reasuransi utk individual risk
q
Biasanya bersifat hazardous risk
q
Optional untuk asuradur maupun reasuradur
q
q
terdapat proses offer dan counter offer (full underwriting info as far as possible) Bisa dilakukan dengan metode proportional atau non proportional
12
METHODS OF REINSURANCE Proportional Facultative – Advantages
q
q
additional capacity beyond auto capacity such as treaty
q
proteksi treaty dari hasil underwriting yg kurang baik
q
q
lesser concern about possible adverse results (the reinsurer has examined the risk) technical expertise from reinsurer Proportional Facultative – Dis advantages
q
q
ketidakpastian akseptasi
q
reasuradur mempengaruhi underwriting policy
q
pekerjaan administrasi yg tinggi (new/ alteration/ renewal)
q
biaya administrasi yg tinggi
Karakteris tik ini juga berlaku untuk Non Proportional Facultative
13
METHODS OF REINSURANCe Non Proportional Facultative Reins urance
q
q
Biasanya utk penempatan large or complex risk → metode ini lebih efektif dibandingkan prop fac re
q
Original premium yg ditahan oleh reinsured lebih besar daripada prop fac re
q
Reinsured has faith in the risk management practices of the insured
q
q
q
q
Fac XL may be the answer if the reinsurer regards the primary premium as inadequate Fac XL enables the Reinsured to maintain confidentiality of his pricing of the original policies Reinsured saves the expenses involved in collecting small losses The disadvantage of this method is that the priority in in fact a firs t los s limit
14
RETROCESSION & SPIRAL Further retrocession??
Business again retroceded
Retrocession
Business further retroceded
15
DISTRIBUTION ARRANGEMENTS q
Direct
q
Reins urance Brokers
q
Underwriting Agency
q
Broker’s Cover
q
Line Slip
q
Pools
Thank you 16
