Advantages of facultative underwriting in
reinsurance
- Risks are
considered individually- one-off reinsurance that the insurer purchases
for a certain or a group of risks.
- It gives the
insurer a competitive advantage in the market they choose.
- There is a chance
for the reinsurer and insurer to have a profitable and successful
partnership.
Disadvantages of facultative underwriting in
reinsurance
- The risk of
successful placement cannot be relied upon by the insurer.
- The associated
administration is challenging and expensive.
- Unless
reinsurance placement is completed or initiated, coverage cannot be
confirmed.
How digitalisation helped in facultative
underwriting
Digitalisation has its
fair share of contributions to the world of re/insurance. Hence, the following
is how digitalisation has helped the sector:
- Artificial Intelligence - AI helped with
new ways of assessing risks, such as through language and image.
- Internet of things - helped gather
customer information for risk and price calculations with telematics
devices. For example, telematics auto insurance tracks and sends
data to an insurance provider.
- Cloud computing - with cloud
computing, information can be digitally stored and assist with more
information for risk analysis. Information asymmetry is reduced, for
instance.
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The process of
facultative reinsurance and its underwriting is complicated. Malaysian Re is a
reinsurance company that is ready to help insurers by providing them with the
financial coverage they require. Head over to https://www.malaysian-re.com.my/ to learn more about
their latest insights on reinsurance.