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Course 1: Theoretical Approach of International Insurances & Reinsurances

International Insurances and Reinsurances The Faculty of International Business and Economics the 2nd year of study
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the Academy of Economic Studies - Bucharest

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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 protection 4. 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 of International 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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2. Need of protection
For persons For companies

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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 protection 4. 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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What is insurance?

Equitable Premiums
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POOL
The insurers benefit from the law of

large numbers

Claims

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

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Insurance Market
Those who seek to buy insurance
General Public Groups Companies Insurance Co.'s Reinsurance Co.'s

Those who seek to sell insurance

Insurance Companies Lloyd's of London Reinsurers Government

Intermediaries
Lloyd's Brokers Consultants Agents

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The Underwriting Process

CLIENT BROKER

UNDERWRITER
Decline Accept Premium
Terms and Conditions
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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.)

(100%)

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

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Reinsurance
The Direct Insured (oil co.) (100%)

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

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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Reinsurance Relationships
Direct Insured Insurer Contract of Insurance

Reinsured or Cedant
Reinsurer

Contract of Reinsurance Contract of Retrocession

Retrocedant
Retrocessionaire
NB Privity of contract in each case!
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How the Intermediaries Place Business

Insure Me
Quotation Placement

Accounting
Documentation
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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 of International 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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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 of International 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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The Meaning of Risk

480TURBO

The Insured Object

The Peril Insured Against The Probability of Loss

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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 Frequency Evaluation Economic Control Severity

Physical
Pre loss
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Financial
Retention Transfer

Post loss

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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 protection 4. Functions of insurance & Reinsurance 5. Risk and chance 6. Classification of insurance
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Classes of Insurance

Marine

Aviation

Life

Non-marine Property
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Motor Non-marine Casualty

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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. 2. 3. 4. 5. 6. Transportation Insurances Property Pecuniary Liability Insurance Health Insurances Package insurance

LIFE

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Main Classes of Insurance

GENERAL NON-LIFE

1. Transportation Insurances Motor Marine 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 Risks Livestock

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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 Accident Sickness Medical expenses

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Main Classes of Insurance

GENERAL NON-LIFE 6. Package insurance Travel insurance Traders combined Household

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Main Classes of Insurance

II. LONG TERM INSURANCES

Life Assurance
Term Assurance Whole Life Endowment

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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 protection 4. Functions of insurance & Reinsurance 5. Risk and chance 6. Classification of insurance
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Thank You!

Next subject: International insurance market

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