搜索
Understandingreinsurance:HowreinsurerscreatevalueandmanageriskTableofcontentsExecutivesummary3Whataretheessentialsofreinsurance?4Whatisreinsurance?Whooffersreinsurance?Whobuysreinsurance?BenefitsofreinsuranceReinsurancemakesinsurancemorestableandattractiveHowdoreinsurersmanagerisks?9TheconceptofriskmanagementUnderwriting–assessment,capacityallocationandpricingAssetmanagementCapitalmanagementDiversificationandriskmanagementWhatframeworkisneededforreinsurancetofulfilitsrole?15Appendix116Howdoinsurerstransferriskstoreinsurers?Appendix218StatisticalinformationaboutreinsurersAppendix320BibliographyReinsuranceisoneofthemajorriskandcapitalmanagementtoolsavailabletoprimaryinsurancecompanies.Itis,however,hardlyknownoutsidetheinsurancesector.Thispapercontributestotheindustry’seffortstoexplaintheessentialsofreinsurancetoabroaderaudience.Itdescribestheprinciplesoflifeandnon-lifereinsurance,whyinsurersbenefitfrombuyingreinsurancecoverandhowreinsurersdealwithrisk.Itconcludeswithanoverviewofthegeneralframeworkneededforreinsurancetofunctionefficiently.Reinsuranceisinsuranceforinsurers.Insurersbuyreinsuranceforriskstheycannotordonotwishtoretainfullythemselves.Reinsurershelptheindustrytoprovideprotectionforawiderangeofrisks,includingthelargestandmostcomplexriskscoveredbytheinsurancesystem.Insurersalsobenefitfromthecapitalreliefthatreinsuranceprovidesandfromreinsurers’productdevelopmentskillsandriskexpertise.Assuch,reinsur-anceisanindispensablepartoftheinsurancesystemthatmakesinsurancemoresecureandlessexpensive.Thisisultimatelyforthebenefitofpolicyholderswhogetmoreprotectionatalowercost.Aswithinsurance,reinsuranceisfundamentallyapromisetopaypossiblefutureclaimsagainstapremiumtoday.Reinsurersapplysophisticatedriskmanagementprocessestoensurethatthispromisecanbehonoured.Theseprocesses–includingriskmonitoringandmodelling–guaranteethatthecapitalbaseandtherisksassumedarealigned.Reinsurersgenerallyhaveahighlyratedcapitalbase:themajorityofreinsurersareratedatleastsingle‘A’withStandard&Poor’s,andonlyfewbankruptciesofreinsurershavebeenregisteredinthepast.Reinsuranceis,byitsnature,aglobalbusinesswhichdeployscapitalacrossgeographicboundariesandlinesofbusiness.Toworkeffectively,itrequiresareliablelegalsystemwhichissecureandhonoursthefreedomofcontract.Inaddition,reinsuranceneedsaregulatoryframework,whichgivesreinsurersmarketaccesstoprovidetheirservices,allowsfreemovementofcapitalandreliesoncapitalrequirementswhichrecogniserein-surers’broaddiversificationacrosslinesofbusinessandgeographiesandtheirsuperiorriskmanagementcapabilities.Executivesummary3UnderstandingreinsuranceWhataretheessentialsofreinsurance?4UnderstandingreinsuranceReinsurancepremiumsamountedtoUSD176billionin2003.ThemajorityofthetoptenreinsurershaveaverystrongfinancialstrengthratingThebusinessmodelsofinsurersdefinetheirreinsuranceneedsWhatisreinsurance?Reinsuranceisinsuranceforinsurers.Itisanagreementbetweenaninsurer(cedent)andareinsurer:thereinsureragreestoindemnifythecedentagainstallorpartofalosswhichthecedingcompanymayincurundercertainpoliciesofinsurancethatithasissued.Inturn,thecedentpaysaconsideration,typicallyapremium,anddisclosesinformationneededtoassess,priceandmanagetheriskscoveredbythereinsurancecontract.Whooffersreinsurance?InitsGlobalReinsuranceHighlights,2004edition,Standard&Poor’slistsapprox-imately250reinsuranceentitiesin50countries.Inaddition,thereisalargenumberofsmallcompanies,alsoincludingprimaryinsurers,offeringreinsurance.In2003,premiums(cessions)amountedtoUSD176billion.Non-lifereinsurancepremiumsaccountedforUSD146billion,whichisequivalentto13.7%ofthepremiumswrittenbytheglobalnon-lifeprimaryinsuranceindustry(seeFigure1andAppendix2fordetailedinformation).ThecorrespondingpremiumfigureforlifereinsuranceisroughlyUSD30billionor1.9%oftotallifeinsurancepremiums.Thevolumeoflifebusinessced-edtoreinsurersislowerthanthatofnon-lifeastypicallyonlymortalityanddisabilityrisksarereinsuredwhilethelargeproportionofsavingsbusinessisretainedbytheprimaryinsurers.Themarketshareofthetenlargestreinsurancecompaniesisabout54%intermsofpremiumvolume.Shareholders’equityoftheworld’s40biggestreinsurancegroupsamountedtoaboutUSD249billionin2003,accordingtoStandard&Poor’s.Thecapitalstrengthofreinsur-ersisgenerallyaboveinvestmentgrade.Ofthetoptenreinsurancegroups,sixcompa-nieshaveafinancialstrengthratingofatleast‘AA-’,asmeasuredbyStandard&Poor’s,or“verystrongfinancialsecurity”withrespecttotheirabilitytopayundertheirpoliciesandcontractsinaccordancewiththeirterms.Thestableandsoundcapitalbaseofthereinsuranceindustryisalsoreflectedinthesmallnumberofbankruptciesamongreinsurancecompanies:between1980andJune2003,just24reinsurersfailed.Noneofthesewasofsubstantialsize:theaffectedpremiumvolumeaccountedforonly0.24‰oftotalcessionsoverthistime.Whobuysreinsurance?Reinsurersdealwithprofessionalcorporatecounterpartiessuchasprimaryinsurers,reinsuranceintermediaries,multinationalcorporationsandtheircaptiveinsurersorbanks.Themajorityofreinsuranceclientsareprimaryinsurers,fromallclassesofinsurance.Howmuchbusines