Hi Graham,
On battlecard #10, pre-set limits on timing of payments is listed as a risk limiting feature. However, on battlecard #12 (2018.Fall #5a), 'premium paid quarterly' is classified as a 'non risk-limiting feature'.
Would you please clarify if it is actually a risk limiting feature? Thanks!
Comments
Yes, I see how that's confusing. In BattleCard 10, I'm referring to loss payments from the reinsurer back to the insurer. (This is reimbursement for ceded losses.) But in BattleCard 12, the non-risk-limiting feature refers to premium payments from the insurer to the reinsurer. I have edited BattleCard 10 to make that more clear. Thanks!
In general, you must have both timing risk and U/W risk for risk transfer to have occurred. That means the reinsurer can't schedule when they're going make the reimbursements for ceded losses back to the primary insurer. That would remove timing risk. But the premium payments from the primary insurer to the reinsurer have nothing to with timing risk so those payments can be scheduled.