IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/1512.html
   My bibliography  Save this paper

The World Bank primer on reinsurance

Author

Listed:
  • McIsaac, Donald A.
  • Babbel, David F.

Abstract

Reinsurance is a mechanism the insurance industry uses to spread the risk it assumes from policyholders. Through reinsurance, the industry's losses are absorbed and distributed among a group of companies so that no single company is overburdened with the financial responsibility of offering coverage to its policyholders. Catastrophes, unexpected liabilities, and a series of large losses that might be too great for an individual insurer to absorb can be handled through reinsurance. Without it, most insurers would be able to cover only the safest of ventures, leaving many risky but worthwhile ventures without coverage. The authors present a primer of reinsurance concepts, explaining such terms as ceding company, primary carrier, direct underwriter, cession, retrocessions, ceding commission, and surplus relief reinsurance. There are separate sections on: 1) The purposes of reinsurance (for example, underwriting capacity, earnings stability, reserve requirement reduction, and mechanism for existing business), 2) Methods of cession for reinsurance contracts (treaty, facultative, and automatic facultative), 3) Types of reinsurance contracts (proportional, nonproportional, hybrid, and retrocessions), 4) Prices and usage of reinsurance contracts, 5) The economics of risk transfer, 6) The characteristics of reinsurance risk, 7) The reinsurance market and 8) Reinsurance regulation.

Suggested Citation

  • McIsaac, Donald A. & Babbel, David F., 1995. "The World Bank primer on reinsurance," Policy Research Working Paper Series 1512, The World Bank.
    • Handle: RePEc:wbk:wbrwps:1512
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1995/09/01/000009265_3961019143806/Rendered/PDF/multi_page.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kahn, Paul Markham, 1961. "Some Remarks on a Recent Paper by Borch*)," ASTIN Bulletin, Cambridge University Press, vol. 1(5), pages 265-272, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. P. Nowak, 1999. "Analysis of Applications of Some Ex-Ante Instruments for the Transfer of Catastrophic Risks," Working Papers ir99075, International Institute for Applied Systems Analysis.
    2. Vittas, Dimitri, 1995. "Tunisia's insurance sector," Policy Research Working Paper Series 1451, The World Bank.
    3. Howard Kunreuther, 1997. "Managing Catastrophic Risks Through Insurance and Mitigation," Center for Financial Institutions Working Papers 98-13, Wharton School Center for Financial Institutions, University of Pennsylvania.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jianfa Cong & Ken Tan, 2016. "Optimal VaR-based risk management with reinsurance," Annals of Operations Research, Springer, vol. 237(1), pages 177-202, February.
    2. Amir T. Payandeh-Najafabadi & Ali Panahi-Bazaz, 2017. "An Optimal Combination of Proportional and Stop-Loss Reinsurance Contracts From Insurer's and Reinsurer's Viewpoints," Papers 1701.05450, arXiv.org.
    3. Jianfa Cong & Ken Seng Tan, 2016. "Optimal VaR-based risk management with reinsurance," Annals of Operations Research, Springer, vol. 237(1), pages 177-202, February.
    4. Guerra, Manuel & de Lourdes Centeno, Maria, 2008. "Optimal reinsurance policy: The adjustment coefficient and the expected utility criteria," Insurance: Mathematics and Economics, Elsevier, vol. 42(2), pages 529-539, April.
    5. Suci Sari & Arief Hakim & Ikha Magdalena & Khreshna Syuhada, 2023. "Modeling the Optimal Combination of Proportional and Stop-Loss Reinsurance with Dependent Claim and Stochastic Insurance Premium," JRFM, MDPI, vol. 16(2), pages 1-20, February.
    6. Hu, Duni & Wang, Hailong, 2019. "Reinsurance contract design when the insurer is ambiguity-averse," Insurance: Mathematics and Economics, Elsevier, vol. 86(C), pages 241-255.
    7. Tan, Ken Seng & Weng, Chengguo & Zhang, Yi, 2011. "Optimality of general reinsurance contracts under CTE risk measure," Insurance: Mathematics and Economics, Elsevier, vol. 49(2), pages 175-187, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1512. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.