Verbal agreements between cedant and reinsurer
In the CIA.Rein paper, Risk Transfer Principle #3 states that the entire agreement must be considered which includes any verbal or written agreements. However, in the Freihaut Risk Transfer paper it says, "the CEO and CFO must confirm that there are no separate oral/written agreements between cedant and reinsurer".
One says to check them and make sure they are considered and the other says make sure they don't exist which I guess are sort of the same thing since if they do exist after the CEO and CFO check then they will be aware of them. Just wanted to confirm that these are related, they are talking about the same thing and that my logic is correct. Thanks!
Comments
Both the CIA and Freihaut papers stress the importance of considering the full economic substance of a reinsurance agreement. The CIA states that all written and verbal side agreements must be included in the risk transfer assessment, while the Freihaut paper emphasizes that the CEO and CFO must confirm no such undisclosed agreements exist. Though framed differently, both aim to ensure transparency and an accurate evaluation of risk transfer.
If the CEO/CFO discover any such agreements during their confirmation, they must be considered in the risk transfer assessment (just as the CIA paper says). So their attestation should confirm either: