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Re- insurance
It is a liability insurance. The parties of
Re- insurance contact are principle insured, insured, or re- insurer. Insurer
play two type of role. Re- insurance is a method to shift access or extra
amount of loss to some another insurance company. Same company may be insurer
or re- insurer. Under re- insurance all types of insurance contact is possible.
Advantage :
1. Transfer of financial burden to the re-insurance
company.
2. Stability in profit.
3. Unhealthy competitions in the insurance business
can be cancelled.
Methods of Re-insurance
1. Shopping method or street method
2. Treaty method or treaty mean agreement
1)
Fixed quota method or
fixed share method
2)
Surplus line method
3)
Access of loss method
4)
Pulling method or syndicate
method
1. Shopping method or street method:
All insurance are available
On-line. The information given to main insurer is not compulsory. Some contract
which is not re- insured that feel unprotectness. Here re-insurer or main
insurer mutually decide the conditions.
2.
Treaty method or treaty
mean agreement
a) Fixed quota method or fixed share method
Some percentage will be decided. Eg. 50% of all insurance insured
under re-insurance. Normally in public sector it is applicable. Quota decide in
the form of percentage.
b) Surplus line method
For eg. Surplus line 10,000 rupees, main insurance contract is 3,00,000
and 50% insured as re-insurance.
c) Access of loss method
Re- insurance contract are based upon the amount of loss instead
of insured value of the contract. Re-insurance play a partial loss.
d) Pulling method or syndicate method
This method is used to
create the fund and with the help of this fund all claim would be paid. It is
also known as syndicate method
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