G
GIstudent57
Member
Hi,
Can someone explain the gearing effect of reinsurance? It was briefly mentioned at a tutorial and I have also seen it mentioned in the ASET solutions. For example, in Q4 of the April 2021 sitting which was based around injury discount rates.
Following a significant change in discount rates, "reinsurance will need to be reviewed, and the cost of it may increase, particularly so for XoL due to the gearing effect".
Thanks
Can someone explain the gearing effect of reinsurance? It was briefly mentioned at a tutorial and I have also seen it mentioned in the ASET solutions. For example, in Q4 of the April 2021 sitting which was based around injury discount rates.
Following a significant change in discount rates, "reinsurance will need to be reviewed, and the cost of it may increase, particularly so for XoL due to the gearing effect".
Thanks