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International Insurances and Reinsurances
The Faculty of International Business and Economics
the 2nd year of study
the Academy of Economic Studies - Bucharest
Course 1:Theoretical Approach of
International Insurances & Reinsurances
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Course 1: Theoretical Approach of
International Insurances & Reinsurances
SUMMARY
1. Origin & evolution
2. Need of protection
3. Risk spread types of protection4. Functions of insurance & Reinsurance
5. Risk and chance
6. Classification of insurance
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Merchants
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1. Origin & Evolution
3000 BC Chinese, Babylonians
IX BC Greeks, Romans
Marine Insurances
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Course 1: Theoretical Approach ofInternational Insurances &
Reinsurances
SUMMARY
1. Origin & evolution
2. Need of protection
3. Risk spread types of protection4. Functions of insurance & Reinsurance
5. Risk and chance
6. Classification of insurance
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2. Need of protection
For persons
For companies
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Course 1: Theoretical Approach ofInternational Insurances &
Reinsurances
SUMMARY
1. Origin & evolution
2. Need of protection
3. Risk spread
types of protection4. Functions of insurance & Reinsurance
5. Risk and chance
6. Classification of insurance
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3. Risk spread types of protection
Insurance
Coinsurance
Auto-insurance
Reinsurance
The mechanism of insurance, coinsurance, reinsurance & retrocession
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Equitable Premiums
Claims
The contributions of the many to meet the losses of the few
POOL
The insurers
benefitfrom the law of
large numbers
What is insurance?
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Insurance Market
Those who seek to
buy insurance
Those who seek to
sell insurance
IntermediariesLloyd's Brokers
Consultants
Agents
General Public
Groups
Companies
Insurance Co.'s
Reinsurance Co.'s
Insurance Companies
Lloyd's of London
Reinsurers
Government
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The Underwriting Process
Terms and Conditions
CLIENT
BROKER
UNDERWRITER
Decline
Accept
Premium
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The Underwriting Process
CLIENT
PRODUCING BROKER
LLOYDS
BROKER
OVERSEAS
DOMESTIC
MARKET
LONDON
MARKET
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Coinsurance
The Direct
Insured (oil co.)
Co.A
30%
Co.B
20%
Co.C
20%
Co.D
15%
Co.E
15%
Coinsurance
(100%)
BROKER
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Reinsurance
The Direct
Insured (oil co.)
Co.A
30%
Co.B
20%
Co.C
20%
Co.D
15%
Co.E
15%
Coinsurance
(100%)
BROKER
Reinsurance
50% of 30%
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Reinsurance
Reinsurance
Facultative Treaty
Proportional Non-Proportional
Quota Share Surplus Lines Excess of Loss Stop Loss
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Direct Insured
Reinsurer
Retrocedant
Retrocessionaire
NB Privity of contract in each case!
Contract of
Insurance
Contract of
Reinsurance
Contract of
Retrocession
Reinsurance Relationships
Insurer
Reinsured or Cedant
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Insure Me
Quotation
Placement
Accounting
Documentation
How the Intermediaries Place Business
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Independent Intermediary
identify best market
negotiate terms & conditions
advice re policy wording
collect premiums
advise re claims
uninsured loss recovery
granting cover
issuing cover notes
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Course 1: Theoretical Approach ofInternational Insurances &
Reinsurances
SUMMARY
1. Origin & evolution
2. Need of protection
3. Risk spread
types of protection4. Functions of insurance & Reinsurance
5. Risk and chance
6. Classification of insurance
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4. Functions of insurance & Reinsurance(I)
Functions of insurance
Financial compensation of losses
To prevent the losses
Financial function Saving
Reduction of the administrative costs
The development of the services - invisible trade
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4. Functions of insurance & Reinsurance(II)
Functions of reinsurance
Protection of the direct insurers
To get a stability of losses
High risks spread Higher flexibility of the insurer
Higher capability of risks subscription
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Course 1: Theoretical Approach ofInternational Insurances &
Reinsurances
SUMMARY
1. Origin & evolution
2. Need of protection
3. Risk spread
types of protection4. Functions of insurance & Reinsurance
5. Risk and chance
6. Classification of insurance
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The Meaning of Risk
The Insured Object
The Peril Insured Against
The Probability of Loss
480TURBO
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Risks for insurers
To be calculated
Not to be avoided
Not to be aware of them
To be afforded
To be compensated
To be included within a contract
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Nature Of Perils
EXCLUDED Perils: An exception, or exclusion under the policy
UNINSURED Perils: Just not mentioned under the policy
INSURED Perils: Things covered under the policy
Under the policy there
are three possibilities,
see above
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Risk Management
Identification
Evaluation
Economic Control
Frequency
Severity
Physical Financial
Pre loss Post loss Retention Transfer
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Course 1: Theoretical Approach ofInternational Insurances &
Reinsurances
SUMMARY
1. Origin & evolution
2. Need of protection
3. Risk spread
types of protection4. Functions of insurance & Reinsurance
5. Risk and chance
6. Classification of insurance
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Classes of Insurance
MarineAviation
MotorNon-marine
Property
Non-marine Casualty
Life
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Classification of insurance (I)
Criteria:
Type of insured risks:
Life
Non-life
Legal report:
Compulsory
Optional
The object of insurance:
Property insurance
Personal insurance
Liability insurance
Financial insurance
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Classification of insurance (II)
Insured risks
Environmental risk
Risk of accident
Risk of liability
Risk of death
Covered territory
Domestic
External
Type of reports
Direct
Indirect
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Main Classes of Insurance
GENERAL NON-LIFE
1. Transportation Insurances
2. Property
3. Pecuniary
4. Liability Insurance
5. Health Insurances
6. Package insurance
LIFE
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Main Classes of Insurance
GENERAL NON-LIFE
1. Transportation Insurances
MotorMarine
Aviation
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Main Classes of Insurance
GENERAL NON-LIFE
2. Property Fire & Special perils
Theft
Money
Engineering
Glass
Goods in transit
All RisksLivestock
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Main Classes of Insurance
GENERAL NON-LIFE
3. Pecuniary
Fidelity guarantee
Legal expenses
Credit
Business interruption
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Main Classes of Insurance
GENERAL NON-LIFE
4. Liability Insurance
Employers liability
Public liability
Products liability
Professional indemnity
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Main Classes of Insurance
GENERAL NON-LIFE
5. Health Insurances
Personal AccidentSickness
Medical expenses
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Main Classes of Insurance
GENERAL NON-LIFE
6. Package insurance
Travel insuranceTraders combined
Household
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Main Classes of Insurance
II. LONG TERM INSURANCES
Life Assurance
Term AssuranceWhole Life
Endowment
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Course 1: Theoretical Approach ofInternational Insurances &
Reinsurances
SUMMARY
1. Origin & evolution
2. Need of protection
3. Risk spread types of protection
4. Functions of insurance & Reinsurance
5. Risk and chance
6. Classification of insurance
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C i ht 2006 A hi Gl b l I
Next subject:
International insurance market
Thank You!
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