Reinsurance reserving

[Adithyan]

Developing individual losses and applying the reinsurance programmes to them

We develop each individual loss to ultimate settled value. We run each loss
through all the applicable reinsurance contracts to calculate the ultimate
recoveries. We track the recoveries for each contract and aggregate them so
that we can apply aggregate limits and retentions. We can also calculate
reinstatement and additional premiums.
I understood that after developing losses to ultimate reinsurance contract terms are applied and recoveries are calculated and then aggregate of the remaining payments to be made by direct writer is calculated to apply the aggregate retention and aggregate limit to get the recoveries.


We aggregate the recoveries and premiums by line and year and compare them
to paid and incurred recoveries and premiums to calculate the reinsurance
reserves.

I don't get the comparison they are talking about in the above paragraph.

Please help!

Thank you

Regards
Adithyan

 

[Hemant Rupani]

We aggregate the recoveries and premiums by line and year and compare them
to paid and incurred recoveries and premiums to calculate the reinsurance
reserves.

I think they meant Reinsurance Premiums as Exposure to Reinsurance Premiums, so after comparing paid and incurred recoveries by a line of business and year we can estimate recoveries per exposure and can use Reinsurance Premiums to calculate Reinsurance Recoveries( thus Reinsurance reserves.)