Transfer of risk with QS
Hi,
If a QS has a capped loss ratio at above 100%, Is it going to be treated as reinsurance accounting or deposit accounting?
It looks like you're new here. If you want to get involved, click one of these buttons!
Hi,
If a QS has a capped loss ratio at above 100%, Is it going to be treated as reinsurance accounting or deposit accounting?
Comments
In a quota-share reinsurance contract, both the cedent and the reinsurer experience the same loss ratio. If the loss ratio is above 100%, then the reinsurer experiences a loss and it is appropriate to treat it with reinsurance accounting. But remember, in this article, risk transfer is defined as having a reasonable chance of a reasonable loss. If this condition is satisfied, then the transaction can be treated with reinsurance accounting, even if the loss ratio is not above 100%.