Types of Reinsurance
At times, such as in years of heavy monsoons and floods, insurer companies anticipate having to pay more claims owing to people facing more losses and damages to homes, other property, and even their vehicles. At such times, the insuring company pays a certain proportion of the premiums they have collected and pays it to the reinsuring company which then takes on the responsibility of helping share its losses.
Owing to increased digitalization of the insurance industry, it is much easier for people to buy online term plans. This has resulted in a higher number of people buying online term plans which require minimal documentation and time. The iSelect Smart360 Term Plan, available on Canara HSBC, enables you to choose the different requirements you have from the insurance plan and pay premiums online. You can customize your plan on the basis of whether you want life coverage, or you want a plan with coverage for life with a return of premium. You can also choose the optional covers you want to include in your plan and select whether you want to include your spouse in the plan. Once your plan is tailored according to your specifications, you can simply pay premium online.
In times when it is so easy for people to avail life insurance policies, reinsurance takes on an increased importance. There are two types of reinsurance, read on to learn more about them.
- Treaty Reinsurance: Within this type of reinsurance, the reinsurer agrees to provide blanket coverage for all the policies written as well as those that have not been written by the insurer company for a specified duration of time. It can often prove risky for the reinsurer in case they have not studied all the policies issued by the insurer in depth.
- Facultative Reinsurance: With this kind of reinsurance, a reinsurer offers coverage on each particular policy as a single transaction. Since the policies are not grouped together here, it offers the reinsurer greater scope to carefully analyze their risks and then undertake as to whether they wish to cover a part of the policy or the entire policy.
Most reinsurance policies are made on a proportional basis, wherein the reinsurer agrees to receive a certain proportion of the premiums collected for the policies it has undertaken the risks for.
Reinsurance is helpful for the insurance industry in several ways. Read on to learn more about how reinsurance helps the industry.
- Reinsurance enables insurance companies to stay solvent by restricting their own losses. Sharing the risks with a reinsurer enables companies to honour the claims raised by people without being worried about too many people raising claims at the same time.
- The main benefit of reinsurance lies in the insurer restricting losses to their own balance sheets. This situation is likely to arise in times of natural calamities when too many claims are raised at the same time, and insurers might be required to settle them all.
Reinsurance is especially helpful for the insurance industry at times when people can just buy online term plans which offer a range of benefits from the comfort of their own home. With the iSelect Smart360 Term Plan, available on Canara HSBC, you can customize your plan and even get a discount on the premium you pay for insuring your spouse.
