Question

When market is hard, and there is no retrocession support, then what will be the repercussions?

a.

The absence of retrocession support exerts significant influence on the rate quoted by lead underwriter as the primary reinsurer.

b.

The absence of retrocession support exerts significant influence on the rate quoted by ceding insurer

c.

Lead underwriters yield to broker pressure to quote lower rates

d.

Lead underwriters yield to broker pressure to quote higher rates

Posted under IC85 Reinsurance Management

Answer: (b).The absence of retrocession support exerts significant influence on the rate quoted by ceding insurer Explanation:When the market is hard and there is no retrocession support, it means that the primary reinsurer does not have the option to transfer or share the risk with other reinsurers. As a result, the primary reinsurer may be more cautious and less willing to offer favorable terms to the ceding insurer. The absence of retrocession support puts the burden of risk solely on the primary reinsurer, which can lead to higher rates being quoted to the ceding insurer.

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Q. When market is hard, and there is no retrocession support, then what will be the repercussions?
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