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Gutenberg IT Park, Kondapur, Hyd-84

Swing Rate-Non-Proportional Reinsurance

March 1, 2024

I had bought an indemnity-based

December 28, 2024

Date of Loss: 30th August

December 21, 2023

14th & 15th December 2023,

February 8, 2024

Why should any individual buy

December 24, 2024

Health Insurance in 2023-24 constitutes

December 23, 2024

The following are the loss

Reinsurance

Swing Rate-Non-Proportional Reinsurance

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I have always wondered why Reinsured’s buy the layer with Swing Rate? Are they not better off retaining that layer? That too with a loading of 100/70.

I can understand why Reinsurers sell it. But never why Cedants buy it? Not even sure whether they realize that loading of 100/70 means a loading of 42.5% and not 30% on the burning cost.

Some brokers try to justify saying there is Minimum rate and Maximum Rate. I tell them-look at the range between minimum and maximum rate-it is so wide that more likely than not the final calculation will fall within this range.

Some brokers tell me-this layer has been bought for over a decade-how can we convince the cedant to retain it? My answer is simple-take last 5 or 10 years statistics of the final premium paid to reinsurers versus the claims recovered from this layer from reinsurers. Decision making becomes very simple.

I would have asked this question to many brokers and cedant buying their lowest layer with Swing Rates. I could never get a satisfactory reply. Only reply I heard is this is being bought for many years. I would be more than happy to get a satisfactory reply -I would be happy to change my views and drop this question for ever.

Blog by Atmaram Cheruvu

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