Conclusion of an treaty reinsurance contract requires more “preliminary work” than for facultative reinsurance, but in this case, after making an treaty contract, the insurer can spend less on reinsuring the risks taken and focus on direct insurance.
Preliminary work includes:
- Analysis of the insurer’s portfolio in order to find an optimal kind of reinsurance (proportional or non-proportional);
- Calculation of the main points of the reinsurance contract: net retention (excess), reinsurance fee, reinsurance premium, etc.
- Making a draft reinsurance contract: terms of risk ceding, payment of reinsurance premium, additional conditions, etc.
- You may as well need to have your contract translated in Russian if the contract is to be placed in the Russian reinsurance market.