Types of reinsurers
I am a bit confused of the types of reinsurers there are currently. Based on the wiki, there are:
Authorized Reinsurers
Unauthorized Reinsurers
Certified Reinsurers
What is the difference between an authorized reinsurer & a certified reinsurer? After 2012, are they the same thing?
Comments
Certification improves the standing of an unauthorized reinsurer, but it is still not authorized by the reporting entity's domiciliary state. The reinsurance provision for a certified reinsurer is less than that for an unauthorized reinsurer, but more than that for an authorized reinsurer.
For one of the bullet points of certified reinsurer it mentions that "any reinsurer that would've been unauthorized prior to 2012" should that really be authorized? Otherwise anyone that "would've" been categorized unauthorized is just automatically certified, would that not just be every insurer that was not authorized? That bullet point is really confusing me on what is happening for designation after 2012.
Anyone that is certified after 2012 would have been unauthorized before 2012. But not everyone that was unauthorized before 2012 is certified after 2012. Some remain unauthorized after 2012.
Does this answer your question?
Yes, thank you
Sure, good luck.
Are Unauthorized reinsurers fairly common? Why would an insurer have a contract with an unauthorized reinsurer if it is illegal?
They are fairly common. The term "unauthorized" does not mean it is illegal to do business with them. It means that it will cost the cedent more in terms of Reinsurance Provision to do business with them.