A
Arunk
Member
I am reading through Chapter 2, page 26. Please could you give some more detail about the underlined bits below:
1) In functions of RITC, it says "It is a reinsurance of all liabilities for a premium that is usually settled in terms of assets including outwards reinsurance cover."
2) Regarding the Lloyd's chain of security:
"If, for some reason, the chain fails then the reinsured members can become liable."
What I don't understand here is how can the reinsured members become liable? Doesn't their association end at RITC?
3) From the chain of security paragraph again: "An important effect of the RITC is to allow members to take 100% of the reinsurance as an asset in their solvency tests and thus to release, when all years are closed, their funds at Lloyd’s. To remove liability would require a Part VII transfer."
Doesn't this contradict point 2 above?
1) In functions of RITC, it says "It is a reinsurance of all liabilities for a premium that is usually settled in terms of assets including outwards reinsurance cover."
2) Regarding the Lloyd's chain of security:
"If, for some reason, the chain fails then the reinsured members can become liable."
What I don't understand here is how can the reinsured members become liable? Doesn't their association end at RITC?
3) From the chain of security paragraph again: "An important effect of the RITC is to allow members to take 100% of the reinsurance as an asset in their solvency tests and thus to release, when all years are closed, their funds at Lloyd’s. To remove liability would require a Part VII transfer."
Doesn't this contradict point 2 above?