Insurance risk transfer and categorization of reinsurance contracts

Eugene Gurenko, Alexander Itigin () and Renate Wiechert
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Alexander Itigin: World Bank, Postal: 1818 H Street, NW, Washington DC 20433, United States
Renate Wiechert: World Bank, Postal: 1818 H Street, NW, Washington DC 20433, United States

Journal of Financial Perspectives, 2013, vol. 1, issue 3, 121-141

Abstract: Despite the existence of numerous quantitative approaches to the categorization of financial reinsurance contracts, insurance regulators may often find the practical implementation of the task to be technically challenging. This paper develops a simple, affordable and robust regulatory method that can help insurance regulators categorize whether financial reinsurance contracts classify as reinsurance. By reviewing real examples of different categorization methods, this paper explains how the proposed method, the Standardized Expected Reinsurer’s Deficit (SERD), standardizes such categorization. It also summarizes the existing pertinent literature on the subject with the view to helping insurance regulators to first apply some simple indicators to flag the main issues with financial reinsurance contracts that may need further reviews.

Keywords: reinsurance; financial reinsurance contracts; regulation; expected reinsurance deficit (search for similar items in EconPapers)
JEL-codes: G22 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jofipe:0031

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