Telephone: +44 (0)207 488 3055

Telephone: +44 (0)207 488 3055

Reinsurance

Reinsurance is a process of risk transfer whereby original insurers will dilute their exposures by purchasing varying types of reinsurance cover; the effect of this is to reduce accumulations and aggregations of large loss scenarios or concentrations of financial exposure. Reinsurance is in itself a specific and specialised market.
By covering the insurer against accumulated liabilities, reinsurance gives the insurer more security for its equity and solvency by increasing its ability to withstand the financial burden when unusual, major events occur. This stabilises insurance company results and enables growth and innovation to continue, reduces earnings volatility and makes better use of capital.

Types of reinsurance products offered include: –

Facultative

Protecting an insurer for an individual or specified risk or contract.

Proportional

The reinsurer receives a pro-rated share of all policy premiums sold by the insurer.  For a claim, the reinsurer then bears a portion of the losses based on a pre-negotiated percentage.

Non-proportional

The reinsurer doesn’t have a proportional share in the insurer’s premiums and losses.  The priority of retention limit is based either on one type of risk or an entire risk category.

Treaty

Protecting an insurer for a broad group of policies.

Retrocession

As part of a risk management process, a reinsurer may pass on some of the risk to another reinsurer or to the capital markets through securitisation.  The capital needed to cover a particular exposure falls as diversification increases, making reinsurance inherently attractive.

The benefits of reinsurance: –

Risk transfer function

Stabilise financial results by smoothing the impact of unexpected major losses and peak risks.

Risk finance function

Offer reinsurance as a cost-effective substitute for equity or debt, allowing clients to take advantage of global diversification.

Information function

Support clients in pricing and managing risk, developing new products and expanding their geographical footprint. Insurers can access reinsurers’ expertise when entering new markets.

LMIS has strong relationships with the world’s largest reinsurance companies, built over many years and are thus able to offer a wide range of coverages to meet an insurers professional requirements.

For all enquiries, please contact us at:
broker@lmisbroker.co.uk