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Premiums for 'Originial Terms' reinsurance- I Surplus basis

C

Curious_actuary

Member
How are the premiums between the cedant and the reinsurer are decided for 'Original terms' reinsurance on an 'Individual Surplus basis'? Are they in the same proportion of (Retention/Sum assured) for different policies?

For Quota share it is clear that the premiums and SA are divided by the same proportion for all the policies.

One more Q - Core reading says that under the With Profits contracts the 'Original terms' re-insurance is not suitable beacuse the reinsurer will be obiliged to follow the cedant's bonus rates...

But how is 'Risk premium' method suitable? Is it because under this method, the reinsurance amount is based on the excess of the reserves, and reserves are based on the assumed future bonus rates and hence the reinsurer would not be obiliged to follow the cedant's bonus rates?


Thanks for reading...
 
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