UAE – Homogeneous risks basis of premium retention
Friday, 04 15 2016, Category: Insurance and Reinsurance, Country: U.A.E
The Insurance Authority said that the homogeneity of risks that enter a portfolio of every insurance company is the main basis in order to set the premium retention rate.
It clarified that companies that have large insurance portfolios, with a good underwriting, along with free reserves are the ones that have the optimal retention technically.
It confirmed that the premium retention rate of every insurance company in every insurance branch is a delicate exercise that need specialized reserving capabalities.
It indicated that those who mention low retentions, premiums lost abroad, and insurers acting as brokers for reinsurers actually do not understand technically the problem.
It indicated that the retention by small insurance companies of large shares of premiums of aviation, marine hull, oil, or high rise building as a very risky endeavor i.e gambling.
Source: Al Roeya - UAE