Property and Casualty Reinsurance Principles

You will develop a broad understanding of the concept of reinsurance and how the mathematic and legal aspects come together to ensure a fair deal for both the insurer and reinsurer.

You will develop a good understanding of various reinsurance types such as quota share reinsurance protection and excess of loss reinsurance as well as insights into how they are priced and how the specific contracts work. 

You will learn the difference between proportional and non-proportional reinsurance treaties.

To attend this course, participants should have between one to two years' experience in an insurance company and be comfortable with the basic principles of Property/Liability primary insurance.

The entire programme is conducted in English. Participants must therefore be able to communicate fully in the language. 

Swiss Re Institute reserves the right to postpone applications from candidates not yet fulfilling the above prerequisites.

6 – 10 March 2023

The event may be photographed, videotaped, filmed and /or digitally recorded. You consent to Swiss Re's use, free of charge, of any memorialization of the event in which you may appear for any Swiss Re publication or promotional purpose.

Session 0 - Introduction to the course

Session 1 - Introduction to Reinsurance
We will look at the definition of reinsurance, and how to understand the word 'risk'. We will consider the key players in the reinsurance market including insurers, reinsurers and reinsurance brokers, as well as Swiss Re's place within that world. We will examine the different functions of reinsurance and why diversification means that reinsurers can write risk at a lower capital cost. We will look at the different methods of reinsurance (facultative or treaty) and the different types of reinsurance (such as excess of loss or quota share).

Session 2 - Proportional Treaty Reinsurance
We will look closer at the types of reinsurance currently available and explain what proportional reinsurance means. We will compare different types (like quota share and surplus) by looking in detail at the cessions embedded in specific reinsurance contracts. We will look at the main terms laid down in a quota share reinsurance contract such as the criteria for retentions, unearned premium and portfolio transfer. We will break down the various components that make up the insurance premium and analyse ceding commission and potentially profit commission paid to the Reinsured. We will go on to examine how certain pricing considerations effect the commission. Finally, we will explain how facultative reinsurance could work together with quota share and surplus treaty reinsurance products in one common protection programme.

After 16:00h: City walk, dinner

Session 3 - Non-Proportional Treaty Reinsurance
We will compare the different types of non-proportional reinsurance including risk excess of loss, event excess of loss and stop loss (also known as excess of loss ratio), and in this context, consider what constitutes one "risk" and one "event". We will distinguish between man-made and natural catastrophes and look at the history of such disasters over time. We will ascertain what drives the increase in natural catastrophes and consider how aggregate excess of loss reinsurance protection works.

Session 4 - Reinsurance costing: an introduction (Part 1)
Reinsurance costing can be complicated, so we have broken the subject down into two digestible parts. We start with an overview - Costing components (how reinsurers determine an adequate price and why each reinsurance contract must be individually priced); expected loss (the present value of expected future loss payments for a particular reinsurance cover); types of losses (attritional, large, and event losses); and the six costing methods most commonly used (including guidance on when to employ each method). We then move on to experience rating (what has happened) and burning cost (the ratio of actual past reinsured losses to a ceding company's subject matter premium). After that we tackle exposure rating (often used when we just have a profile of risks underwritten rather than loss data).

Session 5 - Reinsurance costing: an introduction (Part 2)
In part 2 we continue with the topic of natural catastrophe (such as windstorm, earthquake, flood, and hail), and explain the main differences between fire and natural catastrophe costing (including an assessment of the vulnerability of exposed values, distribution of property values, and insurance conditions). We also examine loss frequency curves to analyse how often the loss of a certain size might occur. We go on to consider casualty lines and specifically, how legislative changes, new exposures (such as cyber, drones, and autonomous cars), and long-tail legacy claims affect the adequacy of reinsurance pricing and reinsurance reserving. We ask whether it is possible to build changes into the reinsurance contract to counter adverse effects. Finally, we move on to proportional rating and how to determine the adequate price for quota share / surplus using predicted reinsurance losses and including a loading for costs and profit.

Session 6 - Reinsurance contracts and clauses: best practice
We will take a detailed look at reinsurance contracts including an analysis of the factors that shape them, the way in which they work in a claim situation and why there are no standard reinsurance contracts. In the second part of this module we go on to examine the seven most important clauses, including specifics such as jurisdiction, special termination procedures and inspection of records.