Associate in Reinsurance (ARe)

Classify the treaty before calculating recovery; proportional and excess-of-loss contracts allocate premium and claims differently. This determines which premium, losses, and limits enter the recovery calculation.

Apply it: Example: a treaty summary omits an exclusion found in the signed wording; apply the signed clause before estimating recovery.

Calculate the layer as attachment plus limit and verify covered subject loss; a nominal layer may not respond to excluded or outside-scope losses.

Apply occurrence, event, hours, and loss definitions from signed wording; a summary cannot expand treaty protection beyond the agreed terms.

Apply the agreed share only to eligible premium and loss; verify ceding commission and adjustments separately from claim allocation. Book the allowance separately so recovery still traces to ceded loss.

Apply it: Example: a ceding commission lowers net premium cost; record it separately from the $2.5m layer recovery.

Treat a ceding commission as a premium allowance under the contract, not as payment of a ceded claim. Confusing the two can overstate claim collections.

Reconcile gross premium, ceded share, retained share, and adjustments; unexplained differences can signal booking or treaty-application errors. Trace each balance to its contract and accounting period.

Recovery starts only when covered subject loss exceeds retention; below attachment the cedent bears the loss under that layer. A loss below attachment remains the cedent's responsibility.

Apply it: Example: a $4m xs $1m layer pays $2.5m on a covered $3.5m loss before wording adjustments.

Cap recovery at the purchased limit; any covered loss above exhaustion remains with the cedent or another reinsurance layer. Amounts above exhaustion need another valid source of protection.

Track remaining limit across valid claims and apply reinstatement only when purchased and triggered under the contract. Do not assume an exhausted layer automatically renews its limit.

Combine losses only when event definitions and hours clauses permit; separate occurrences may have distinct retentions and limits. Apply the relevant hours clause before assigning the event total.

Apply it: Example: two $400,000 unrelated losses do not reach a $500,000 per-risk attachment when treated separately.

Do not aggregate unrelated per-risk losses unless treaty wording allows it; combining them could create an unsupported recovery. Each risk remains subject to its own attachment unless wording says otherwise.

Apply an occurrence cap after valid aggregation; the gross event total can exceed what the reinsurer owes. The reinsurer's maximum follows the contract, not the gross event estimate.

Give notice by the agreed deadline and include required facts; late or incomplete notice can impair recovery or consent rights.

Apply it: Example: notice arrives after deadline; preserve the timeline and seek treaty review before deciding recovery is barred.

Provide reserves, settlement updates, and material records under cooperation clauses; incomplete files can delay agreement on recoveries. This supports timely validation of the reinsurer's share.

Escalate allocation or coverage disputes against the operative treaty; resolve clause meaning before booking uncertain amounts as collectible. Recognition should reflect wording, collectibility, and unresolved uncertainty.

Reconcile gross loss to retained and ceded amounts after adjustments; the accounting should trace every dollar to a contract layer.

Apply it: Example: a reinsurer's credit weakens; reassess collateral and collectability before treating expected recovery as secure.

Assess counterparty credit, collateral, and payment history; a valid recovery may still be uncollectible when security is weak. Credit exposure can delay or reduce realized recoveries.

Review protection cost, concentration, and basis risk after renewal; a treaty can leave emerging exposures outside its defined trigger. Basis mismatch can leave a loss uninsured despite adequate nominal limits.