Pricing motor quota share treaties
The quota share is an older and simpler form of reinsurance than the excess of loss treaty. While rating of excess of loss treaties has always been a matter for specialists, scant attention has been paid to the pricing of quota share treaties for some time – but why?
In regulated markets with universally binding premium rates the order of magnitude of the expected claims ratio was known, as was the level of commissions that would make it possible to operate the reinsurance business at a profit – at least in the long term. In deregulated and new markets where the basis for the calculation of primary-insurance premiums is still uncertain, the situation is different since there is no reliable empirical foundation for pricing quota share treaties.
The publication "Pricing motor quota share treaties" fills a gap in Swiss Re's range of publications because it gives the reinsurer a tool for determining the appropriate commission for motor quota share treaties in such situations. It was written primarily for reinsurers who have to price reinsurance covers in practice. But it should also be helpful to primary insurers who need such prognoses for their planning calculations.
