Q2: Reinsurance can be used by an insurer to solve several problems. Assume you are an insurance consultant who is asked to give recommendations concerning the type of reinsurance plan or arrangement to use. For each of the following situations, indicate the type of reinsurance plan or arrangement that the ceding insurer should use, and explain the reasons for your answer. Company A is a primary insurer and your stable client. It starts offering automobile insurance and wants to reinsure 50% of the losses. Company B, currently not your client, is a primary insurance company that introduces a new insurance product covering a risk of loss on yachts. The average value of a transport plane is €300,000. A pool of insurers covering a nuclear power plant property and liability risk wants to reinsure this risk in your company.

Reinsurance-It can be rightly termed as insurance of insurance. Under this process, the original…

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Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter5: Probability: An Introduction To Modeling Uncertainty

Section: Chapter Questions

Problem 17P: The probability distribution for damage claims paid by the Newton Automobile Insurance Company on...

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Q2: Reinsurance can be used by an insurer to solve several problems. Assume you are an insurance consultant who is asked to give recommendations concerning the type of reinsurance plan or arrangement to use. For each of the following situations, indicate the type of reinsurance plan or arrangement that the ceding insurer should use, and explain the reasons for your answer.

Company A is a primary insurer and your stable client. It starts offering automobile insurance and wants to reinsure 50% of the losses.
Company B, currently not your client, is a primary insurance company that introduces a new insurance product covering a risk of loss on yachts. The average value of a transport plane is €300,000.
A pool of insurers covering a nuclear power plant property and liability risk wants to reinsure this risk in your company.

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