1. Theoretical Approach of Insurances

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LEARN. PERFORM. GROW.

Copyright 2006 AchieveGlobal , Inc.

International Insurances and Reinsurances

The Faculty of International Business and Economics

the 2nd year of study

the Academy of Economic Studies - Bucharest

Course 1:Theoretical Approach of

International Insurances & Reinsurances


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Course 1: Theoretical Approach of

International Insurances & Reinsurances

SUMMARY

1. Origin & evolution

2. Need of protection

3. Risk spread types of protection4. Functions of insurance & Reinsurance

5. Risk and chance

6. Classification of insurance


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Merchants


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1. Origin & Evolution

3000 BC Chinese, Babylonians

IX BC Greeks, Romans

Marine Insurances


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Course 1: Theoretical Approach ofInternational Insurances &

Reinsurances

SUMMARY



3. Risk spread types of protection4. Functions of insurance & Reinsurance

5. Risk and chance



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For persons

For companies


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Reinsurances

SUMMARY



3. Risk spread

types of protection4. Functions of insurance & Reinsurance

5. Risk and chance



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3. Risk spread types of protection

Insurance

Coinsurance

Auto-insurance

Reinsurance

The mechanism of insurance, coinsurance, reinsurance & retrocession


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Equitable Premiums

Claims

The contributions of the many to meet the losses of the few

POOL

The insurers

benefitfrom the law of

large numbers

What is insurance?


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Insurance Market

Those who seek to

buy insurance

Those who seek to

sell insurance

IntermediariesLloyd's Brokers

Consultants

Agents

General Public

Groups

Companies

Insurance Co.'s

Reinsurance Co.'s

Insurance Companies

Lloyd's of London

Reinsurers

Government


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The Underwriting Process

Terms and Conditions

CLIENT

BROKER

UNDERWRITER

Decline

Accept

Premium


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The Underwriting Process

CLIENT

PRODUCING BROKER

LLOYDS

BROKER

OVERSEAS

DOMESTIC

MARKET

LONDON

MARKET


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Coinsurance

The Direct

Insured (oil co.)

Co.A

30%

Co.B

20%

Co.C

20%

Co.D

15%

Co.E

15%

Coinsurance

(100%)

BROKER


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Reinsurance

The Direct

Insured (oil co.)

Co.A

30%

Co.B

20%

Co.C

20%

Co.D

15%

Co.E

15%

Coinsurance

(100%)

BROKER

Reinsurance

50% of 30%


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Reinsurance

Reinsurance

Facultative Treaty

Proportional Non-Proportional

Quota Share Surplus Lines Excess of Loss Stop Loss


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Direct Insured

Reinsurer

Retrocedant

Retrocessionaire

NB Privity of contract in each case!

Contract of

Insurance

Contract of

Reinsurance

Contract of

Retrocession

Reinsurance Relationships

Insurer

Reinsured or Cedant


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Insure Me

Quotation

Placement

Accounting

Documentation

How the Intermediaries Place Business


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Independent Intermediary

identify best market

negotiate terms & conditions

advice re policy wording

collect premiums

advise re claims

uninsured loss recovery

granting cover

issuing cover notes


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Reinsurances

SUMMARY



3. Risk spread


5. Risk and chance



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4. Functions of insurance & Reinsurance(I)

Functions of insurance

Financial compensation of losses

To prevent the losses

Financial function Saving

Reduction of the administrative costs

The development of the services - invisible trade


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4. Functions of insurance & Reinsurance(II)

Functions of reinsurance

Protection of the direct insurers

To get a stability of losses

High risks spread Higher flexibility of the insurer

Higher capability of risks subscription


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Reinsurances

SUMMARY



3. Risk spread


5. Risk and chance



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The Meaning of Risk

The Insured Object

The Peril Insured Against

The Probability of Loss

480TURBO


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Risks for insurers

To be calculated

Not to be avoided

Not to be aware of them

To be afforded

To be compensated

To be included within a contract


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Nature Of Perils

EXCLUDED Perils: An exception, or exclusion under the policy

UNINSURED Perils: Just not mentioned under the policy

INSURED Perils: Things covered under the policy

Under the policy there

are three possibilities,

see above


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Risk Management

Identification

Evaluation

Economic Control

Frequency

Severity

Physical Financial

Pre loss Post loss Retention Transfer


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Reinsurances

SUMMARY



3. Risk spread


5. Risk and chance



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Classes of Insurance

MarineAviation

MotorNon-marine

Property

Non-marine Casualty

Life


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Classification of insurance (I)

Criteria:

Type of insured risks:

Life

Non-life

Legal report:

Compulsory

Optional

The object of insurance:

Property insurance

Personal insurance

Liability insurance

Financial insurance


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Classification of insurance (II)

Insured risks

Environmental risk

Risk of accident

Risk of liability

Risk of death

Covered territory

Domestic

External

Type of reports

Direct

Indirect


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Main Classes of Insurance

GENERAL NON-LIFE

1. Transportation Insurances

2. Property

3. Pecuniary

4. Liability Insurance

5. Health Insurances

6. Package insurance

LIFE


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GENERAL NON-LIFE

1. Transportation Insurances

MotorMarine

Aviation


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GENERAL NON-LIFE

2. Property Fire & Special perils

Theft

Money

Engineering

Glass

Goods in transit

All RisksLivestock


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GENERAL NON-LIFE

3. Pecuniary

Fidelity guarantee

Legal expenses

Credit

Business interruption


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GENERAL NON-LIFE

4. Liability Insurance

Employers liability

Public liability

Products liability

Professional indemnity


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GENERAL NON-LIFE

5. Health Insurances

Personal AccidentSickness

Medical expenses


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GENERAL NON-LIFE

6. Package insurance

Travel insuranceTraders combined

Household


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II. LONG TERM INSURANCES

Life Assurance

Term AssuranceWhole Life

Endowment


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Reinsurances

SUMMARY



3. Risk spread types of protection

4. Functions of insurance & Reinsurance

5. Risk and chance



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C i ht 2006 A hi Gl b l I

Next subject:

International insurance market

Thank You!


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1. Theoretical Approach of Insurances

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