On the Risk Premium flashcard (Chapter 24, Flashcard 5), it says that: - Cedant reinsures part of the sum assured or sum at risk (excess of sum assured payable over reserve) on the reinsurer's risk premium basis, which can be annually renewable or guaranteed - Reinsurer determines its risk premium by assessing likely experience of the business it is to reinsure, and then adding expenses and profit margins. It may or may not guarantee these rates for term of policy - Risk premium may be level over the term of the policy or may vary annually the probability of the claim Was the same point around guaranteed vs reviewable rates made 3 times or do all 3 points refer to something different?
The first two look the same. The third is a bit different and is covering the possibility of the 'level risk premium' type mentioned in the notes. The risk premium rate could be a flat amount for the term of the policy, or increase with duration as the risk increases with age.
