Reference no: EM133402697

Question

We do prefer to deal with larger insurers because our average losses per year are around $ 10 million which are going to be covered by insurer. Hence for this larger amount, the insurer needs to be larger enough so that he is capable and competent in managing such larger incurrence for our business. Hence we cannot survive with smaller insurer for our business. Reinsurance is defined as process of sharing the risk of the insurer for larger amount by other insurer companies. Thus once insurer makes the insurance for larger amount, then this insurer will be covered by other insurance companies and the insurance liability amount will be shared by all companies, so that one insurer will not be liable for larger amount and it will be shared and supported by more than one insurer. The following information we do need to know about the purchase of reinsurance as below · Registered Name of the second insurers · Liability limits distribution among all insurers. · Single window contact for the insured company/person. · Insurance claim processing liability with primary insurer. · Reinsurance contract terms with secondary insurers. · Written document for reinsurers and their share for managing the liabilities,