Hi, Two quick questions on chapter 29, page 22 re. Integrated Risk Covers: 1. "They are used to avoid buying excessive cover" -Is this because separate reinsurance treaties may overlap with each other? 2. A disadvantage to insurer of an Integrated Risk Cover: "difficulty in structuring the provider’s risk management programme in a holistic, multi-line way – as typically separate risk managers would be used for separate risk types." What does this point mean? Thanks in advance
Hi 1. With integrated risk covers you get exactly what you want because they're bespoke products. This avoids the possibility of overlaps. 2. Integrated risk covers tackle a range of risks in a single product, but within the company those risks might be managed by individual risk managers. The point here is that it might be difficult to develop a unified response to risk when the underlying managers aren't properly aligned. Hope that helps.
Thanks Steve. For 2) does the provider of an integrated risk cover ('IRC') offer risk management services in addition to reinsurance -or does the mention of 'risk management programme' just mean difficulty in structuring the IRC arrangement itself (due to the insurer having separate managers for each risk and they will have different views/needs)? And is the reinsurance provided in an IRC typically quota share, non-proportional, etc or bespoke to each arrangement.
The issue of having numerous risk managers sits with the company rather than the IRC provider. IRCs are bespoke arrangements, so the company can negotiate for whatever it needs.
