Net of Inuring Reinsurance

Insurance companies use many instruments to reduce the risk of their portfolios. Facultative reinsurance, proportional (Quota-Share) reinsurance, per-risk treaties (surplus share, per-risk excess of loss), traditional excess of loss covers, and aggregate loss covers comprise the bulk of the tools available to insurance company risk managers. Treaty contracts often include special warranties as to how it behaves with respect to other treaties for the same insured. The order in which treaties apply is often referred to as the “inuring order.”

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