Definition Reinsurance and Principles in Relationships Between Insurers and Re-Insurers In Reinsurance Agreement.
If the insurer has obtained a definition as referred to in the Code of Commercial Law and Bankruptcy article 246 and then has been refurbished in the Law of the Republic of Indonesia No. 2 of 1992 on Pereasuransian Enterprises Chapter I General Provisions Article
Definition of reinsurance, as summed up in Article 271 of the Commercial code looks soul and rhythm with specialist reinsurance advanced by Robert I Mehr and E. Cammack in a book entitled Principles of Insurance which states: "Reinsurance is the insurance of the insurance" (Ref. Page no. 723), meaning that reinsurance is insurance of insurance or "insurance insurance" (AJ Marianto 1997).
Furthermore, Robert I Mehr and Emerson Cammack give an example or an explanation as follows: "When a company has received from an agent a volume of insurance on a given property or in a given area, in excess of the amount it wishes to retain an its book, it can reinsure the contract "(if an insurance company cover risks or she closes the risks in a specified area through an agent, he can underwrite back / return excess risks that exceed its maximum capacity). (A. J. Marianto 1997).
Based on the above understanding, the insurance company based on the principle of interest that can be insured, has closed a coverage against the risk or risks in a particular area can underwrite back excess liability or excess liability that goes beyond themselves or own their capacity retention to another insurer.
For more details, let's look at another version reinsurance understanding by some expert of experts:
1. GF. Michelbacher
In his book entitled Multiple Line Insurance, G.F. Michelbacher to formulate a sense of reinsurance as follows: "The process whereby one insurer arranges with one or more other insurers to share risk is reinsurance" (the process by which an insurer set up by one or more person in the other to share risks referred reinsurance / reinsurance).
The formulation of Michelbacher defines reinsurance as a process in which one person set up with one or more other person in order to share the risk.
2. Mollengraaf
Mollengraaf stated reinsurance is the agreement implemented by an insurer to insurer more named as reinsurer (reinsurers), in which approvals second party to receive premium predetermined willing to reimburse the first party, the restitution first party shall pay it to insured as a result of an insured that is held between the first party and the insured.
3. R. C. REINARZ
"Reinsurance is the acceptance by a penaggung known as reinsurers / penaggung reset to all or part of the risk of loss from another insurer called giver session (ceding company)".
Based on a wide range of expert opinion mentioned above it can be concluded that the definition of reinsurance in the true sense can be viewed from several aspects as follows:
a. technical aspects
b. legal aspects
c. Financial aspect
a. Reinsurance understanding of the technical aspects
Judging from the technical aspects of reinsurance is a means or a tool / means to reduce or minimize the risk of the load received by diverting all or part that risk to another insurer. Risks faced by the first person in the real sense is the burden of the risks that may arise as a result of the perpetration of business activities by taking over all or some of the risks faced by the original insured. Thus reinsurance (reinsurance) has a very large peraanan in the field of the insurance industry.
b. Reinsurance understanding of the legal aspects
From the legal aspect, reinsurance is an agreement between an insurer with one or more of the insurer / reinsurer. Insurers are required to give and re penaggung agreed obliged to accept all or part of risk that is given to him. As with any insurance, reinsurance agreements also be reciprocal. This agreement raises the rights and obligations between the two parties. Therefore reinsurer also entitled to receive all or part of the premiums received by the insurer first under policies that have been published.
c. Definition of reinsurance of financial aspects
From an economic phenomenon, the intent and purpose of the party held a reinsurance agreement to transfer all or part of risk acceptance due to the insurance agreement to the insurer the other is to convert an uncertainty in order to become more defined, for the sustainability of its business in the face of all possibilities or opportunities obligation to pay compensation or great benefits that can lead to poor underwriting results and affect our financial condition.
Reinsurance has a miraculous functions that are as follows:
1. Provide a guarantee or protection to the management of underwriting losses that may at any time jeopardize the liquidity, solvency, and the sustainability of their business activities.
2. Increase the capacity of acceptances of insurance companies on the risks that go beyond its limits because the excess of accountability that they can not accommodate itself will be secured by a reinsurer that has put him up.
3. As a spreader of risk, reinsurance market both domestic and overseas market.
4. If the reinsurance cooperation on most of the risk carried out between the members of the insurance company, there will be two functions in it, namely as the spread of risk and as a means of exchange of business that is able to increase its premium income which can be held as well as their expenses are pulapemasukan premiums.
5. Increase or support stability in underwriting results and financial condition of insurance companies, including maintaining the stability of its earnings. In this case, as if the reinsurance functions provide banking facilities to the insurance company.
6. Improve and increase flexibility in marketing a wide range of insurance products, both conventional and new with all sorts of the size of the level of risk.
7. Indirectly reinsurance can serve to help fund operations of insurance companies, particularly disesikan based reinsurance contracts.
The relationship between the insurer (ceding company) and the reinsurer very basic rests on five principles of insurance and coupled with one another principle called the principle / basis Follow the fortunes of the ceding company. For more details will be explained below:
All agreements made in good faith, including insurance and reinsurance agreements. Based on this principle, both parties, both the first insurer (ceding company) and reinsurer (reinsurer) is obliged to do something that does not contradict or violate the law.
What is meant by doing anything rubbing in the implementation of the reinsurance agreement is that the parties must also penaggung disclosure and or notify all data and information about the object and or interest is borne by him. Not allowed to hide any data or information that should be known by reinsurer related to their participation in bear all or part of the risk.
If the ceding company has made a deliberate disguise the fact, meaning they have committed an act contrary to law or violate the good faith that may cause the cancellation of the reinsurance agreement that has been formed. The more so in case of fraud, the reinsurance agreement that has been formed will be automatically canceled in accordance with the law as set out in the Code of Civil Code Article 1321.
In addition to the applicable insurance contract, this principle also applies to the reinsurance agreement. By making or receiving insurance coverage, the insurer already has an interest that arise because of the engagement, which is responsible / accountable for claims arising from events that agreement. In other words, the insurer will always face the possibility of claims for compensation that may arise at any time upon the closing of coverage. Therefore, based on the Commercial code Article 271, the insurer reserves the right to once again re-underwrite / re-insurance is closing.
Most prevailing in agreement coverage, reimbursement or recovery can be carried out by the reinsurer is limited to the actual damages are being paid by the first insurer to the insured in accordance with the original terms and conditions of the applicable policy and legal. The amount of reimbursement paid by the reinsurer to the insurer first to be proportional to the shares or ownership interests in reinsurance.
Based on this principle, the person who has made the payment of legitimate compensation to the insured is entitled to replace the position of the insured person to obtain redress and claim damages or to third parties under the law shall be liable for any losses arising from errors or omissions them.
The principle contribution or to bear this in fact is not only valid in the case of insurance, but also applies in the case of reinsurance. Fundamental relationship between the insurer first and reinsurer on the principle of compensation which also adheres to the provisions of the benchmark compensation and other terms that have been described, the contribution is also used as the basis mentukan risk sharing and or session to the parties concerned including the distribution of claims expense to be borne sesusai together with shares or ownership interests in terms of insurance, co-insurance and reinsurance. In the case of insurance under the contribution rates implemented between the insurer and the insured because in this case the insured is deemed to participate bear most of the risk on the interests of the insured, while in the case of reinsurance contributions first implemented between the insurer and the reinsurer.
The principle followed luck penanggungung first should not be interpreted broadly and without limit liable penaggung repeated in the case of reinsurance just pitch limit on claims that are legitimate and must be paid by the person in the first match the number of actual losses even if based on the theory and practice of the reinsurer can be requested consent to approve settlement of claims on the basis of a compromise or ex-gratia, the first insurer must have arguments and commercial considerations that the policy was based on the calculation of profit and loss for the mutual benefit
Okay, Thanks you for reading my articles "Definition Reinsurance and Principles", hope you are satisfied and happy reading.
If the insurer has obtained a definition as referred to in the Code of Commercial Law and Bankruptcy article 246 and then has been refurbished in the Law of the Republic of Indonesia No. 2 of 1992 on Pereasuransian Enterprises Chapter I General Provisions Article
1. Paragraph 1 in the case of reinsurance until now there has been no standardized definition
Definition of reinsurance, as summed up in Article 271 of the Commercial code looks soul and rhythm with specialist reinsurance advanced by Robert I Mehr and E. Cammack in a book entitled Principles of Insurance which states: "Reinsurance is the insurance of the insurance" (Ref. Page no. 723), meaning that reinsurance is insurance of insurance or "insurance insurance" (AJ Marianto 1997).
Furthermore, Robert I Mehr and Emerson Cammack give an example or an explanation as follows: "When a company has received from an agent a volume of insurance on a given property or in a given area, in excess of the amount it wishes to retain an its book, it can reinsure the contract "(if an insurance company cover risks or she closes the risks in a specified area through an agent, he can underwrite back / return excess risks that exceed its maximum capacity). (A. J. Marianto 1997).
Based on the above understanding, the insurance company based on the principle of interest that can be insured, has closed a coverage against the risk or risks in a particular area can underwrite back excess liability or excess liability that goes beyond themselves or own their capacity retention to another insurer.
For more details, let's look at another version reinsurance understanding by some expert of experts:
1. GF. Michelbacher
In his book entitled Multiple Line Insurance, G.F. Michelbacher to formulate a sense of reinsurance as follows: "The process whereby one insurer arranges with one or more other insurers to share risk is reinsurance" (the process by which an insurer set up by one or more person in the other to share risks referred reinsurance / reinsurance).
The formulation of Michelbacher defines reinsurance as a process in which one person set up with one or more other person in order to share the risk.
2. Mollengraaf
Mollengraaf stated reinsurance is the agreement implemented by an insurer to insurer more named as reinsurer (reinsurers), in which approvals second party to receive premium predetermined willing to reimburse the first party, the restitution first party shall pay it to insured as a result of an insured that is held between the first party and the insured.
3. R. C. REINARZ
"Reinsurance is the acceptance by a penaggung known as reinsurers / penaggung reset to all or part of the risk of loss from another insurer called giver session (ceding company)".
Based on a wide range of expert opinion mentioned above it can be concluded that the definition of reinsurance in the true sense can be viewed from several aspects as follows:
a. technical aspects
b. legal aspects
c. Financial aspect
a. Reinsurance understanding of the technical aspects
Judging from the technical aspects of reinsurance is a means or a tool / means to reduce or minimize the risk of the load received by diverting all or part that risk to another insurer. Risks faced by the first person in the real sense is the burden of the risks that may arise as a result of the perpetration of business activities by taking over all or some of the risks faced by the original insured. Thus reinsurance (reinsurance) has a very large peraanan in the field of the insurance industry.
b. Reinsurance understanding of the legal aspects
From the legal aspect, reinsurance is an agreement between an insurer with one or more of the insurer / reinsurer. Insurers are required to give and re penaggung agreed obliged to accept all or part of risk that is given to him. As with any insurance, reinsurance agreements also be reciprocal. This agreement raises the rights and obligations between the two parties. Therefore reinsurer also entitled to receive all or part of the premiums received by the insurer first under policies that have been published.
c. Definition of reinsurance of financial aspects
From an economic phenomenon, the intent and purpose of the party held a reinsurance agreement to transfer all or part of risk acceptance due to the insurance agreement to the insurer the other is to convert an uncertainty in order to become more defined, for the sustainability of its business in the face of all possibilities or opportunities obligation to pay compensation or great benefits that can lead to poor underwriting results and affect our financial condition.
Reinsurance has a miraculous functions that are as follows:
1. Provide a guarantee or protection to the management of underwriting losses that may at any time jeopardize the liquidity, solvency, and the sustainability of their business activities.
2. Increase the capacity of acceptances of insurance companies on the risks that go beyond its limits because the excess of accountability that they can not accommodate itself will be secured by a reinsurer that has put him up.
3. As a spreader of risk, reinsurance market both domestic and overseas market.
4. If the reinsurance cooperation on most of the risk carried out between the members of the insurance company, there will be two functions in it, namely as the spread of risk and as a means of exchange of business that is able to increase its premium income which can be held as well as their expenses are pulapemasukan premiums.
5. Increase or support stability in underwriting results and financial condition of insurance companies, including maintaining the stability of its earnings. In this case, as if the reinsurance functions provide banking facilities to the insurance company.
6. Improve and increase flexibility in marketing a wide range of insurance products, both conventional and new with all sorts of the size of the level of risk.
7. Indirectly reinsurance can serve to help fund operations of insurance companies, particularly disesikan based reinsurance contracts.
The relationship between the insurer (ceding company) and the reinsurer very basic rests on five principles of insurance and coupled with one another principle called the principle / basis Follow the fortunes of the ceding company. For more details will be explained below:
1. The Principle of good faith
What is meant by doing anything rubbing in the implementation of the reinsurance agreement is that the parties must also penaggung disclosure and or notify all data and information about the object and or interest is borne by him. Not allowed to hide any data or information that should be known by reinsurer related to their participation in bear all or part of the risk.
If the ceding company has made a deliberate disguise the fact, meaning they have committed an act contrary to law or violate the good faith that may cause the cancellation of the reinsurance agreement that has been formed. The more so in case of fraud, the reinsurance agreement that has been formed will be automatically canceled in accordance with the law as set out in the Code of Civil Code Article 1321.
2. The principle of interest that can be insured
3. The principle of compensation
4. The Principle Subrogation
5. The Principle Contribution / Benefit Bear
6. The principle follow the fortune of theceding company
Okay, Thanks you for reading my articles "Definition Reinsurance and Principles", hope you are satisfied and happy reading.
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