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What Are Your Options to Reinsure Your Umbrella Business?
21
Which is best for you? Reinsurance Options to Transfer your Umbrella Policy Exposure
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What’s the right reinsurance strategy for umbrella exposures – per policy or per occurrence? Read the full blog post here: http://www.genre.com/knowledge/multimedia/what-are-your-options-to-reinsure-your-umbrella-business-presentation.htm
Transcript of What Are Your Options to Reinsure Your Umbrella Business?
Which is best for you?
Reinsurance Options to Transfer your Umbrella Policy Exposure
Ask yourself the following questions when determining the structure for
your Umbrella exposure…
? ? ?
Based on your answers, should you have a per policy or per occurrence umbrella treaty?
Per Policy Reinsurance Umbrella Treaty
Reflects the unique characteristics of Umbrella risks.
The retention, limit and rate are not affected by other Casualty business.
More flexibility and choices of structure Allow you to keep or cede more exposure and premium depending on
profitability of business and corporate risk appetite.
Benefits of a Per Policy Umbrella Treaty
Umbrella Loss severity and volatility are contained within the separate umbrella treaty, thereby not impacting
reinsurance terms on other casualty lines of business.
Benefits of a Per Policy Umbrella Treaty
The reinsurance occurrence limit reflects the umbrella policy limit, eliminating
the risk of breaching treaty aggregate limits.
Benefits of a Per Policy Umbrella Treaty
The occurrence definition within the Umbrella treaty is aligned with policy language, possibly leading to
broader coverage and more recovery.
Benefits of a Per Policy Umbrella Treaty
Reinsurance Premiums tend to be more predictable and stable as they are based on
expected umbrella loss over time.
Benefits of a Per Policy Umbrella Treaty
Combines a variety of insurance products and applies a common set of terms.
Reinsurance occurrence limits and retentions are shared among all products offered by the company.
Per Occurrence Reinsurance Umbrella Treaty
One set of coverage terms and a single retention across all lines of business affords administrative ease in
underwriting, accounting and claims.
Benefits of a Per Occurrence Umbrella Treaty
The stability of knowing the maximum retained loss for any one occurrence (e.g., clash protection)
Benefits of a Per Occurrence Umbrella Treaty
Depending on your umbrella experience, pricing all lines collectively may result in
an upfront umbrella discount net of ceding commission.
Benefits of a Per Occurrence Umbrella Treaty
A claim involving both a primary and umbrella policy could involve less coverage friction
as a single retention is applied to the entire loss.
Benefits of a Per Occurrence Umbrella Treaty
Large regional carriers with casualty retentions equal to or higher than their primary GL or Property product limits
might find this structure of particular value.
Benefits of a Per Occurrence Umbrella Treaty
Comparison
Exposure Based Price
Discounted Price
tailored “all-in-one”
more predictability
Greater volatility
More product support Ease and
consistency
No one option is always cheaper, easier, better-suited or predictable.
The specifics will depend on your book of business and the appetite you have to take risk.
We hope this overview is helpful in thinking through Umbrella reinsurance alternatives.
© 2014 General Re Corporation | This presentation is intended to provide background information to our clients and professional staff. It is time sensitive and may need to be revised and updated periodically.
Contact our Umbrella Treaty Team for more information:
+1 203 328 6149 p
Brooke Cote
+1 203 328 5778 p
Elizabeth Kramer Umbrella Business Development
+1 312 526 7546 p
Maria Slowinski Umbrella Specialist
+1 860 520 7669 p
Steve Carr
+1 614 222 3802 p
Brian Monahan
+1 614 222 3844 p
Colin Niemeier
Umbrella Specialist
Umbrella Specialist Umbrella Specialist Treaty Mkt. Strategy & Business Dev.
