There is a reinsurance company. She offers reinsurance to a general insurance company. This general insurance company insures the houses in a village.
A hurricane comes, as it used to be. It destroys the houses, and many claims go to the general insurance company. The owner of the general insurance company hates the hurricane, and pays the claims.
However, some portion of the claims go to the reinsurer as well.
Erm, well, should the reinsurer hate the hurricane, or the ceding company?
I would say, I hate exams, especially UTAR exams!
A hurricane comes, as it used to be. It destroys the houses, and many claims go to the general insurance company. The owner of the general insurance company hates the hurricane, and pays the claims.
However, some portion of the claims go to the reinsurer as well.
Erm, well, should the reinsurer hate the hurricane, or the ceding company?
I would say, I hate exams, especially UTAR exams!
5 Echo(es):
A piece of crap!
Thanks!
any relation between UTAR exam and the story above? haha.
Of course the reinsurance company shouldn't hate the ceding company, since that is their customer! No customer, no business.
On the other hand, they shouldn't hate the disaster too. Since if no disaster, lesser risk on the houses, hence lesser premium will receive.
It's just my humble opinion. :)
Haha. There is relation between the story and UTAR exams. Subtle relationship. =)
Definitely the reinsurer should not hate the ceding company. No doubt about it. However, what actuaries are dealing is nothing more than probability. Even if the frequency of calamity follows Poisson Distribution with parameter 10 per month, the reinsurer is still hoping hard that there is no hurricane in a year.
Although statistical and structural model might show high frequency, the hope is still, "No hurricane this year, please, so that we can swallow all the premiums!"
So, well, in my opinion, both ceding company and reinsurer hate hurricane. =)
thanks for the comment you leave in my blog. Hehe. Sorry that I reply late, because I just saw it just now. Don't worry o, I know that you can do it. Let's work hard for future ya!
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