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Schedule F: Reinsurance Provision

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Calculate the total reinsurance provision assuming only 2 reinsurers A & B. (Modeled on 2017.Spring #14)

  current score:
0.000

total provision
    provision for reinsurer A
    provision for reinsurer B
      slow-pay ratio (enter decimal)
      is B a slow-payer? (y/n)

miscellaneous information

notation
unauthorized
reinsurer A
authorized
reinsurer B
amount received: prior 90 days Recvd
letters of credit (LOC) part of C
ceded balances payable part of C
other amounts due reinsurers part of C

recoverables NOT in dispute

notation
unauthorized
reinsurer A
authorized
reinsurer B
Total reinsurance recoverable Tn
recoverable on Paid loss & LAE Pn
recoverable on Paid loss & LAE > 90 days past due Pn90
recoverable on Paid loss & LAE > 120 days past due Pn120

recoverables in dispute

notation
unauthorized
reinsurer A
authorized
reinsurer B
Total reinsurance recoverable Td
recoverable on Paid loss loss & LAE Pd
recoverable on Paid loss & LAE > 90 days past due Pd90
recoverable on Paid loss & LAE > 120 days past due Pd120

Notation

RP = Reinsurance Provision, C = Collateral (other notation is listed in data tables above)

→ Collateral that is not under control of the insurer cannot be counted. An example of collateral that cannot be counted is: collateral held in trust with the reinsurer.

Unauthorized Reinsurer

RP
=  (T – C)  +  min( C , 20% x Pn90)  +  min( C , 20% x Td )     <== capped by T
where
T
=  Tn  +  Td

Time-saving TRICK:    This formula for RP, including the cap, simplifies algebraically to:

RP
min( T C   +   20% x Pn90   +   20% x Td    ,    T )
(thx KB!)

Authorized Reinsurer

RP(not slow-paying)
=  20%  x  (Pn90 + Pd90)
   <== capped by T

RP(slow-paying)
=  20%  x  max( T – C , Pn90 + Pd90 )
   <== capped by T

==> slow-pay ratio
=  Pn90 / ( Pn + Recvd )   (Use slow-pay formula if ratio ≥ 20%)

Solution:
total provision
    provision for reinsurer A
    provision for reinsurer B
        slow-pay ratio
        is B a slow-payer?