Arranging Reinsurance

The first step in securing reinsurance for a captive owner is to select a reinsurance intermediary who will perform all the functions of risk transfer in terms of arranging reinsurance at the best terms, drafting the contracts, paying premium and collecting losses.

Issues to Consider when Selecting a Reinsurer

1. Security. You will need to be assured that the reinsurer will still be in existence when claims need to be paid. A.M. Best provides ratings for each insurance company with A+ being the highest category. If you are unsure of a company's credentials you should obtain outside advice.
2. Service. You will need to be assured that the company responds quickly, efficiently and responsibly to any claims so that you are not left having to fund them yourself.
3. Competitive. You will need to be assured that your reinsurer's prices are not out of line with the market or excessively high.
4. Relationship Potential. On liability business, where claims are often paid long after they arise, establishing a relationship with reinsurers is important. Reinsurers will often only provide reinsurance support to companies that can demonstrate that they can monitor their business proactively and are committed to developing a profitable portfolio of business.