2. Re Reinsurance – Not for the Faint of Heart

3. Re High Finance Large Premiums Large Losses High Exposure Decision making process lies with senior management & board Complicated Programs Maybe it is rocket science – (maybe not, but close to it)

4. Re What is Reinsurance? Classic Textbook Definition “The transaction whereby the assuming insurer, for a consideration, agrees to indemnify the ceding company against all, or a part, of the loss which the latter may sustain under the policy or policies which it has issued.”

5. Re Why do Insurance Companies Buy this Stuff? 1.Smooths results over time. 2.Advice 3.Capacity 4.Ease of Entry 5.It is (was) cheap!

6. Re Major Classifications of Reinsurance 1.Ceded vs. Assumed 2.Treaty vs. Facultative 3.Pro-rata vs. Excess of Loss

7. Re Classifications of Reinsurers 1.Direct Market(Professional) 2.Broker Market

8. Re Responsibilities of a Treaty Underwriter Duties 1.Marketing 2.Underwriting analysis 3.Financial analysis 4.Audits 5.Pricing analysis A treaty underwriter determines what companies will be reinsured, under what price, and under what conditions

9. Re What’s Hot in Reinsurance? 1.Not our results! 142% C/R in 2001 2.Terrorism – Limited or Excluded 3.Mold – “Growing” Problem 4.Cyber Risk 5.Asbestos Losses – Won’t go away

10. Re Notable Reinsurance Claims

11. Career Opportunities in Insurance & Reinsurance 1.Underwriting 2.Actuarial 3.Claims 4.Accounting 5.Finance 6.Loss Control/Risk Management 7.Brokers/Agents

12. Re Case Study The students have the role of Risk Managers of Six Flags Great America theme park. The park opening is set for June1. May 31, the insurance program renews and the broker advises no terrorism coverage will be provided for the renewal. Describe some challenges caused by the lack of terrorism coverage with regard to property and casualty exposures. Describe potential solutions to the challenges.