Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim. The party that diversifies its insurance portfolio is known as the ceding party.

Types of Reinsurances

The two primary forms of reinsurance contracts are — Treaty reinsurance and Facultative reinsurance. Each of these reinsurances caters to different levels of risk subletting.

Treaty reinsurance

A reinsurance contract that involves an insurance business acquiring insurance from another insurer is known as treaty reinsurance. The cedent is the firm that issues the insurance and transfers all of the risks associated with a specific class of policies to the purchasing company, the reinsurer.

Proportional reinsurance

The reinsurer receives a prorated share of all policy premiums sold by the insurer under proportional reinsurance. In the event of a claim, based on a pre-determined proportion, the reinsurer is responsible for a share of the losses. The ceding company is also reimbursed for processing, business acquisition, and writing costs by the reinsurer.

Non-proportional reinsurance

In a non-proportional form of agreement, the reinsurer is liable to pay if the insurer’s losses reach a certain amount, known as the priority or retention limit. As a result, the reinsurer receives no proportional part of the insurer’s premiums or losses. One type of risk or an entire risk category determines the priority or retention limit.


A primary insurer purchases facultative reinsurance to cover a specific risk (or a group of risks) in the business. This form of contract offers a beneficial edge to the reinsurance business, as it helps in reviewing individual risks. On the other hand, reinsurance provides the insurer with additional protection for its equity and solvency in case of extreme events.

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We work with clients to determine the economic feasibility of a self-insurance fleet model & work hand-in-hand with legal and financial representatives to help form and manage the programme.

Once our client makes the decision to develop a SIR, a designated team will guide the development, structuring, execution, operation and management of day-to-day activities. Our Executive Management’s long-standing relationships with national and regional underwriters, service providers, actuaries and claims providers are essential to ensuring smooth operation and success.

Each solution is delivered based upon a comprehensive study of the client’s individual risk profile and with a full understanding of key business goals.  The client’s needs analysis will ensure the optimal structure & what type of programme would be the best solution.

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