1.

THEORETICAL APPROACH OF
INTERNATIONAL INSURANCES &
REINSURANCES
 1. ORIGIN & EVOLUTION
• 3000 BC – Chinese, Babylonians
• IX BC – Greeks, Romans
• Marine Insurances
MERCHANTS
 2. NEED OF PROTECTION
• For individuals
• For companies
 3. RISK SPREAD – TYPES OF
• Insurance
PROTECTION
• Coinsurance
• Auto-insurance
• Reinsurance

• The mechanism of insurance, coinsurance, reinsurance &

retrocession
 WHAT IS INSURANCE?
POOL

€ €
The insurers
benefit
from the law of
large numbers

Equitable Premiums Claims

The contributions of the many to meet the losses of the few

 INSURANCE MARKET
Those who seek to Those who seek to
buy insurance sell insurance

General Public Insurance

Groups Companies
Companies Lloyd's of London
Insurance Co.'s Intermediaries
Reinsurers
Reinsurance Co.'s Government
Lloyd's Brokers
Consultants
Agents
THE UNDERWRITING PROCESS
CLIENT

BROKER

UNDERWRITER
Decline
Accept

Premium

Terms and Conditions

THE UNDERWRITING PROCESS
CLIENT

PRODUCING BROKER

OVERSEAS
LLOYD’S DOMESTIC
BROKER MARKET

LONDON
MARKET
 COINSURANCE
The Direct
Insured (oil co.) (100%)

BROKER

Coinsurance
Co.A Co.B Co.C Co.D Co.E
30% 20% 20% 15% 15%
 REINSURANCE
The Direct
Insured (oil co.) (100%)

BROKER

Coinsurance
Co.A Co.B Co.C Co.D Co.E
30% 20% 20% 15% 15%

Reinsurance
50% of 30%
 REINSURANCE
Reinsurance

Facultative Treaty

Non-
Proportional
Proportional

Quota Surplus Excess of

Stop Loss
Share Lines Loss
REINSURANCE RELATIONSHIPS
Direct Insured Contract of
Insurance
Insurer
Reinsured or Cedant Contract of
Reinsurance
Reinsurer

Retrocedant Contract of
Retrocession
Retrocessionaire
NB Privity of contract in each case!
HOW THE INTERMEDIARIES PLACE BUSINESS

Insure Me

Quotation

Placement

Accounting

Documentation
 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
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”
 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
 THE MEANING OF RISK

480TURBO

• The Insured Object

• The Peril Insured Against
• The Probability of Loss
 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
 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
 RISK MANAGEMENT
Identification
Frequency
Evaluation

Severity
Economic Control

Physical Financial

Pre loss Post loss Retention Transfer

 CLASSES OF INSURANCE

Aviation Life
Marine

Motor
Non-marine
Property
Non-marine Casualty
 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
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
 MAIN CLASSES OF INSURANCE
• GENERAL NON-LIFE
1.Transportation Insurances
2.Property
3.Pecuniary
4.Liability Insurance
5.Health Insurances
6.Package insurance

• LIFE
 MAIN CLASSES OF INSURANCE
GENERAL NON-LIFE

1. Transportation Insurances

Motor
Marine
Aviation
 MAIN CLASSES OF INSURANCE
GENERAL NON-LIFE

2. Property Fire & Special perils

Theft
Money
Engineering
Glass
Goods in transit
All Risks
Livestock
 MAIN CLASSES OF INSURANCE
GENERAL NON-LIFE

3. Pecuniary
Fidelity guarantee
Legal expenses
Credit
Business interruption
 MAIN CLASSES OF INSURANCE
GENERAL NON-LIFE

4. Liability Insurance

Employer’s liability
Public liability
Products liability
Professional indemnity
 MAIN CLASSES OF INSURANCE
GENERAL NON-LIFE

5. Health Insurances

Personal Accident
Sickness
Medical expenses
 MAIN CLASSES OF INSURANCE
GENERAL NON-LIFE

6. Package insurance

Travel insurance
Traders combined
Household
 MAIN CLASSES OF INSURANCE
II. LONG TERM INSURANCES

• Life Assurance

Term Assurance
Whole Life
Endowment
THANK YOU!