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INSURANCE BROKERS OF NIGERIA LIMITED |
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| TYPES OF RE-INSURANCE |
| * Surplus Treaty |
This is a situation whereby the original insurer would retain part of a large risk it has written and pass the excess to the reinsurers to be reinsured. The amount to be retained by an insurere would be varied depending on the capital base of the insurer and free reserve if any, coupled with experience of the Insurance Company on any particular risk to be reinsured. |
* Quota Share Treaty |
This is where the insurer makes arrangement with the reinsurer to share certain percentage of any risk in a ratio of 30/70 or 50/50 basis regardless of the sum insured. For example, if a risk with sum insured of say, N2, the insured will retain 30% or 50% of it and would reinsure the remaining percentage with the reinsurers. |
| * Working Excess of Loss Treaty |
This type of reinsurance cover is arranged to protect the insurers net retention on every individual risk written and retained for their own net account. The reinsurance arrangement for this type of cover is usually in the following form. Like in the above example if the insurers decides to retain N50m under their fire surplus Treaty, it may decide to arrange for working excess of loss cover in the following:- N20m Xs N30m. This means that for every single loss occurence, the insurer or the ceding company will only pay N20m and recover N30m from the reinsurers. |
| * Catastrophe Excess of Loss Treaty |
This type of reinsurance protects the the insurers against wide spread losses that may arise from a single event - e.g. earth quake, tornado, war, strikes and civil commotion, flood disaster, oil pipe explosion. If such disaster occurs, with the arrangement of catastrophe cover, the impact of the loss would be minimized considerably.
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