Seeking for safety has always been a natural
human instinct. Everyday, we go back to our homes that shield us from the rain
and heat, we avoid dangerous sites on our travels — and we do the same with our
money too. We keep our money in banks or invest into funds and most importantly,
buy insurance to provide us with financial security in the face of emergencies.
Purchasing insurance is the most common risk transfer mechanism as it protects
us against financial risks from the uncertainties in life. What are
There are various types of insurance in the market offering different products to a wide range of customers. The most common insurance products are motor insurance, health insurance, life insurance, and property insurance. Insurance is sold through a variety of channels, including face-to-face by insurance agents and brokers, over the internet, in workplace programs and through corporate affiliations. Insurance companies collect premiums from policyholders in return for insurance claims in the face of unforeseen events.
An underwriter facilitates risk evaluation processes to help an insurance company decide whether providing coverage to a consumer or business would be profitable. The underwriting process aims to reduce underwriting risk, which refers to the potential loss that impacts the financial health and profitability of the insurer. Whenever an insurance claim arises, the underwriter needs to evaluate the premium received and determine the number of claims paid out to ensure profitability. To do so, they use statistics, future projections and trends to produce a comprehensive report. This underwriting practice is crucial in all kinds of insurance.
Reinsurance is the practice whereby insurers transfer portions of their risk portfolios as stated in an agreement to other parties in the secondary insurance market. This process is presented as a legal transaction between two parties, namely the ceding party and the reinsurer, to diversify its insurance portfolio and reduce risk of paying large obligations that arise from claims. There are two basic types of reinsurance arrangements. Treaty reinsurance binds the insurer and reinsurer together, as it requires the insurer to cede all the risks specified in an agreement with the reinsurer, instead of just one particular policy. On the contrary, facultative reinsurance is done on a case-by-case basis based on analysing individual cases.
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Malaysian Reinsurance Berhad (Malaysian Re) – a wholly-owned subsidiary of MNRB Holdings Berhad – is the largest national reinsurer (by asset) in Southeast Asia. The Company has an extensive portfolio of business expertise and underwrites all classes of general reinsurance business as well as general and family retakaful businesses. Head over to https://www.malaysian-re.com.my/ to learn more about the reinsurance industry.