A massive commercial development project requires significant insurance capacity, necessitating a multi-tiered distribution of risk. Arrange the following steps in the correct chronological sequence to demonstrate the flow of risk from the original exposure down to the final retrocessionaire.
- 1The property developer purchases a $200 million commercial property policy from Harbor Coastal Insurance to cover the entire development.
- 2Harbor Coastal Insurance retains 150 million to Atlantic Reinsurance under a facultative agreement.
- 3Atlantic Reinsurance assumes the $150 million exposure but subsequently determines that this single coastal project creates an unacceptable concentration of risk in its portfolio.
- 4Atlantic Reinsurance transfers $75 million of its assumed risk to Global Capacity Partners to reduce its overall exposure.
Cevap
The correct sequence traces the risk from the policyholder, to the primary insurer, to the reinsurer, and finally to the retrocessionaire.
The correct sequence accurately traces the hierarchical flow of risk. It begins with the original insured transferring risk to a primary insurer. The primary insurer (ceding company) then transfers a portion of that risk to a reinsurer. The reinsurer evaluates the risk and, finding it too concentrated, acts as a retrocedent by transferring a portion of its assumed risk to a retrocessionaire.
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Anahtar Kavram
Reinsurance Risk Transfer Chain and Retrocession