Tell us… Your name Your department or area of work

2. Tell us… • Your name • Your department or area of work • Number of years you have completed with India Post • Two or three core job-related tasks that you perform everyday • Tools and applications that are used to perform the job-related tasks • Your expectations from this course

5. Prerequisites Learners should be familiar with: • Basic concepts and terminology associated with Life Insurance and Reinsurance • Basic knowledge of working with computers • Basic knowledge of navigating through application interfaces

6. This module will provide information on the concepts of Reinsurance as well as an overview of the application-based solution. After completing this lesson, you should be able to: • Define Reinsurance. • Explain the concepts of Reinsurance and its importance. • Describe the types of Reinsurance. • Discuss aspects of the new application as a solution.

7. Lesson 1 Understanding reinsurance

8. Understanding Reinsurance Reinsurance is a contractual transfer of part of the risks assumed by an insurance company to a second insurer (the reinsurer), in return for the payment of premium. After completing this lesson, you will be able to: • Define Reinsurance and some common terms. • Explain the concept of ‘Shared’ Risk. • Explain associated details for Reinsurance.

9. Definition of Reinsurance • The practice whereby one party called the Reinsurer in consideration of a premium paid, agrees to indemnify another party, called the Reinsured, for part or all of the liability assumed by the latter party under a policy or policies of insurance which it has issued. The reinsured may be referred to as the Original or Primary Insurer, or Direct Writing Company, or the Ceding Company. • Understanding Reinsurance

10. Definition of Reinsurance…Contd. • It is a contractual transfer of part of the risks assumed by an insurance company to a second insurer (the reinsurer), in return for the payment of premium.” • Understanding Reinsurance INSURER REINSURER INSURED INSURANCE CONTRACT REINSURANCE CONTRACT INSURANCE OF INSURANCE COMPANIES

11. Understanding Reinsurance Common Reinsurance Terms

12. The Need for Reinsurance • Understanding Reinsurance

13. Concept of Sharing Risk • Understanding Reinsurance A particular risk can be reinsured with more than one reinsurer. This is an example of how the risk is shared between different reinsurers by a ceding company. Reinsurer - X 40% Reinsurance Assumed=45kX40%=18k Risk=50k Insurer Retention(10%)=5k Reinsurance(90%)=45k Reinsurer - Y 60% Reinsurance Assumed=45k X 60%=27k

14. Sample Scenario to Explain Reinsurance • ABC Life Insurance Company has written a Rs. 100 crore life insurance policy on the life of Mr. JKL, the industrial tycoon. ABC is concerned that Mr. JKL’s death would have a material impact on ABC’s profits from the Rs. 100 crore claim. So, ABC buys coverage on the life of Mr. JKL from XYZ Re- Insurance Company. ABC decides to buy $3 million of coverage from XYZ. • If JKL dies, ABC will have to pay his beneficiary Rs. 100 crore, but ABC can in turn collect on the coverage it obtained from XYZ. The two insurance companies will share the loss, with XYZ bearing Rs. 30 crore of the loss and ABC Rs. 70 crore (Rs. 100 crore paid to the beneficiary less the Rs. 30 crore collected from XYZ). Of course, both companies share in the premiums and profits of the coverage as well as the losses. • In the example: • XYZ is called the reinsurer. • XYZ is not the insurer that wrote the original coverage. They are instead standing behind the original insurer. ABC is called the ceding company or cedant. • ABC has ceded some of its life insurance business to XYZ through the reinsurance arrangement. • Understanding Reinsurance

15. Principles of the Reinsurance Business • Understanding Reinsurance

16. Important Details of a Reinsurance Contract • Understanding Reinsurance

17. Understanding Risk You have reached the end of the lesson. You should now be able to: • Define Reinsurance and some common terms. • Explain the concept of ‘Shared’ Risk. • Explain associated details for Reinsurance.

18. Lesson 2 Types of reinsurance

19. Types of Reinsurance There are a few types of Reinsurance, as well as a concept called Coinsurance. Coinsurance is different from Reinsurance. After completing this lesson, you will be able to: • Define the types of Reinsurance. • Explain the difference between Reinsurance and Coinsurance.

20. Categories of Reinsurance Reinsurance • Types of Reinsurance Forms Facultative Covers individual risk Obligatory Covers Block of Business Types Proportional Non-Proportional Proportional Non-Proportional Quota Share Surplus Excess of loss per Risk Excess of loss per Event Catastrophe Excess of loss Stop Loss WXL/Risk WXL/Event Cat XL

21. Key Types of Reinsurance • Types of Reinsurance FACULTATIVE REINSURANCE TREATY REINSURANCE • It is the individual reinsurance of large or hazardous single risks. • It is non-obligatory. The primary insurer in not obliged to cede the business and the reinsurer is not obliged to accept the risk. • The agreements are individually underwritten and are common for large limit risks that are not homogeneous in nature. • Each risk is considered individually. • Each risk is a separate insurance contract. • It is referred to as an obligatory contract as the primary insurer is obliged to cede the business and the reinsurer is obliged to assume the business, so long as the terms of the treaty are met. • This arrangement is popular when a group of homogenous risks are being insured. A specific or broad agreement between the Insurer and Reinsurer to aid in conducting the reinsurance transactions. • It is a contract which defines the terms and the share of the risk to be placed with a reinsurer. • One contract encompasses all subject risks.

22. Quota Share: Illustration • Under a 30% Quota Share reinsurance contract the following sums would be reinsured on each contract: • Types of Reinsurance • Reinsurance Sum Assured = 30% of Sum Assured • Reinsurance Premium= 30% of Premium • Reinsurance Claim= 30% of Claim

23. Difference Between Reinsurance and Coinsurance • Types of Reinsurance REINSURANCE COINSURANCE REINSURANCE COMPANY INSURANCE COMPANY A INSURANCE COMPANY B INSURANCE COMPANY C INSURANCE COMPANY INSURED INSURED

24. Types of Reinsurance You have reached the end of the lesson. You should now be able to: • Define the types of Reinsurance. • Explain the difference between Reinsurance and Coinsurance.

25. Lesson 3 Application-based Solution for reinsurance

26. Application-based Solution for Reinsurance Using the application, tasks related to Reinsurance can be completed easily. After completing this lesson, you will be able to: • Define the key functions of the application. • Describe the functional model and workflow. • Explain the associated information and processes involved.

27. Key Functions of the Application • Application-based Solution for Reinsurance

28. Functional Model • Application-based Solution for Reinsurance

29. Reinsurance Workflow • Application-based Solution for Reinsurance

30. Common Business Rules • Application-based Solution for Reinsurance

31. Calculation Levels supported by the Reinsurance Application • Application-based Solution for Reinsurance

32. Setting up a Treaty Reinsurance • Application-based Solution for Reinsurance For treaty reinsurance, insurers and reinsurers will sign a treaty contract. Under a treaty each party automatically accepts specific percentages of the insurer’s business. There are four types of treaty, as described below:

33. Setting up Other Reinsurance Information • Except for setting up a treaty, the client also needs to set up other reinsurance information, including changing the retain order, defining the risk category, defining the risk factors, defining the premium rate and defining the commission rate. • Retain order is the priority to retain and reinsure the Sum At Risk (SAR) for the products under the policies which are underwritten. Retain order is determined by two parameters: Product Category and Coverage Term. Coverage Term is categorized into groups depending on the term of the policy, for example, 5 to 10 years as group 1 and 11 to 20 years as group 2. If more than one product belonging to the same category is issued at the same time for a Life Assured, the system determines the retain order based on the policy ID generated by the core system. Risk factors are used to calculate the SAR for some of the cessions. Risk factors include the following: • Application-based Solution for Reinsurance

34. Processing for Auto Treaty • Application-based Solution for Reinsurance

35. Triggering for Facultative Reinsurance • Application-based Solution for Reinsurance

36. Some of the Common Reports • Application-based Solution for Reinsurance

37. Application-based Solution for Reinsurance You have reached the end of the lesson. You should now be able to: • Define the key functions of the application. • Describe the functional model and workflow. • Explain the associated information and processes involved

38. What is the difference between Insurance and Reinsurance? • What are the 2 most important reasons for which Insurance companies opt for Reinsurance cover? • Give the two forms and two types of Reinsurance along with one example of any one type of Reinsurance. • Name any two commonly used Reinsurance reports? • What is the difference between Quota share and Surplus treaty?

39. You have reached the end of the module. You should now be able to: • Define Reinsurance. • Explain the concepts of Reinsurance and its importance. • Describe the types of Reinsurance. • Discuss aspects of the new application as a solution.