Misplaced Pages

#208791

55-493: SOGAZ partners were leading worldwide reinsurance companies : Munich Re , Hannover Re , Partner Re, Swiss Re , SCOR SE , Lloyd's of London , and others. SOGAZ, in accordance with national laws, cedes 10% of total ceded risks under insurance contracts to Russian National Reinsurance Company (RNRC) . European Union companies were banned from doing business with Sogaz in March 2022. Sogaz came under international sanctions from

110-420: A combination of the two. Under a quota share arrangement, a fixed percentage (say 75%) of each insurance policy is reinsured. Under a surplus share arrangement, the ceding company decides on a "retention limit": say $ 100,000. The ceding company retains the full amount of each risk, up to a maximum of $ 100,000 per policy or per risk, and the excess over this retention limit is reinsured. The ceding company may seek

165-500: A company that provides insurance to Russian military personnel and employees of leading defense enterprises under sanctions. For similar reasons, Sogaz is under sanctions from Switzerland, New Zealand, Ukraine and Australia. SOGAZ become the first Russian insurer assigned a long-term credit rating "BBB+" in Russian and foreign currency with a "stable" outlook by Dagong Chinese Rating Agency . A.M. Best has affirmed for SOGAZ (Russia)

220-496: A compromise decision. In May 2007 New York Governor Eliot Spitzer announced more than $ 4.5 billion would be made available to rebuild the 16-acre (65,000 m ) WTC complex as part of a major insurance claims settlement. In the wake of Hurricane Katrina , several thousand homeowners filed lawsuits against their insurance companies accusing them of bad faith and failing to properly and promptly adjust their claims. On 24 June 2009, Florida Governor Charlie Crist vetoed

275-532: A covered loss prevents a person from living in their home, policies can pay the expenses of alternate living arrangements (e.g., hotels and restaurant costs) for a specified period of time to compensate for the "loss of use" of the home until the owners can return. The additional living expenses limit can vary, but is typically set at up to 20% of the dwelling coverage limit. Owners need to talk with their insurance company for advice about appropriate coverage and determine what type of limit may be appropriate. Following

330-421: A facultative agreement coincides with the term of the policy. Facultative reinsurance is usually purchased by the insurance underwriter who underwrote the original insurance policy, whereas treaty reinsurance is typically purchased by an outwards reinsurance manager, or other senior executive at the insurance company. The reinsurer's liability will usually cover the whole lifetime of the original insurance, once it

385-532: A given national market should be approximately equal to the square-root of the number of primary insurers active in the same market. Econometric analysis has provided empirical support for the Powers-Shubik rule. Ceding companies often choose their reinsurers with great care as they are exchanging insurance risk for credit risk. Risk managers monitor reinsurers' financial ratings ( S&P , A.M. Best , etc.) and aggregated exposures regularly. Because of

440-447: A more balanced and homogeneous portfolio of insured risks. This would make its results more predictable on a net basis (i.e. allowing for the reinsurance). This is usually one of the objectives of reinsurance arrangements for the insurance companies. Under proportional reinsurance, one or more reinsurers take a stated percentage share of each policy that an insurer issues ("writes"). The reinsurer will then receive that stated percentage of

495-412: A multinational company, to cover property and liability risks in many countries around the world. In such situations, the insurance company may find a local insurance company which is authorised in the relevant country, arrange for the local insurer to issue an insurance policy covering the risks in that country, and enter into a reinsurance contract with the local insurer to transfer the risks to itself. In

550-432: A quota share arrangement for several reasons. First, it may not have sufficient capital to prudently retain all of the business that it can sell. For example, it may only be able to offer a total of $ 100 million in coverage, but by reinsuring 75% of it, it can sell four times as much, and retain some of the profits on the additional business via the ceding commission. The ceding company may seek surplus reinsurance to limit

605-419: A specialist reinsurance company, which only undertakes reinsurance business, or another insurance company. Insurance companies that accept reinsurance refer to the business as " assumed reinsurance ". There are two basic methods of reinsurance: There are two main types of treaty reinsurance, 'proportional and non-proportional, which are detailed below. Under proportional reinsurance, the reinsurer's share of

SECTION 10

#1732780561209

660-411: A strategic investment for the buyer. Reinsurer Reinsurance is insurance that an insurance company purchases from another insurance company to insulate itself (at least in part) from the risk of a major claims event. With reinsurance, the company passes on ("cedes") some part of its own insurance liabilities to the other insurance company. The company that purchases the reinsurance policy

715-534: A substitute for Catastrophe XLs. In catastrophe excess of loss, the cedent's retention is usually a multiple of the underlying policy limits, and the reinsurance contract usually contains a two risk warranty (i.e. they are designed to protect the cedent against catastrophic events that involve more than one policy, usually very many policies). For example, an insurance company issues homeowners' policies with limits of up to $ 500,000 and then buys catastrophe reinsurance of $ 22,000,000 in excess of $ 3,000,000. In that case,

770-652: A total loss up to $ 1 million, and purchases a layer of reinsurance of $ 4 million in excess of this $ 1 million. If a loss of $ 3 million were then to occur, the insurer would bear $ 1 million of the loss and would recover $ 2 million from its reinsurer. In this example, the insurer also retains any loss over $ 5 million unless it has purchased a further excess layer of reinsurance. The main forms of non-proportional reinsurance are excess of loss and stop loss . Excess of loss reinsurance can have three forms - " Per Risk XL" (Working XL), "Per Occurrence or Per Event XL" ( Catastrophe or Cat XL), and " Aggregate XL". In per risk ,

825-556: Is insured in two main ways—open perils and named perils. Open perils cover all the causes of loss not specifically excluded in the policy. Common exclusions on open peril policies include damage resulting from earthquakes , floods , nuclear incidents , acts of terrorism , and war. Named perils require the actual cause of loss to be listed in the policy for insurance to be provided. The more common named perils include such damage-causing events as fire, lightning , explosion, cyber-attack , and theft. Property insurance can be traced to

880-437: Is common for insurers and reinsurers to have long-term relationships that span many years. Reinsurance treaties are typically longer documents than facultative certificates, containing many of their own terms that are distinct from the terms of the direct insurance policies that they reinsure. However, even most reinsurance treaties are relatively short documents considering the number and variety of risks and lines of business that

935-528: Is governed by the All India Fire Tariff that lays down the terms of coverage, the premium rates and the conditions of the fire policy. The fire insurance policy has been renamed as "Standard Fire and Special Perils Policy". The Standard Fire and Special Perils Policy (SFSP) is a kind of traditional insurance product that is specially designed to protect your property and its articles from the unforeseen unfortunate accidents caused due to fire and

990-444: Is likely to reduce the amount of capital needed to provide coverage. The risks are spread, with the reinsurer or reinsurers bearing some of the loss incurred by the insurance company. The income smoothing arises because the losses of the cedent are limited. This fosters stability in claim payouts and caps indemnification costs. Proportional Treaties (or "pro-rata" treaties) provide the cedent with "surplus relief"; surplus relief being

1045-498: Is referred to as the "ceding company" or "cedent". The company issuing the reinsurance policy is referred to as the "reinsurer". In the classic case, reinsurance allows insurance companies to remain solvent after major claims events, such as major disasters like hurricanes or wildfires. In addition to its basic role in risk management , reinsurance is sometimes used to reduce the ceding company's capital requirements, or for tax mitigation or other purposes. The reinsurer may be either

1100-421: Is to reduce their exposure to loss by passing part of the risk of loss to a reinsurer or a group of reinsurers. With reinsurance, the insurer can issue policies with higher limits than would otherwise be allowed, thus being able to take on more risk because some of that risk is now transferred to the re-insurer. Reinsurance can make an insurance company's results more predictable by absorbing large losses. This

1155-413: Is written. However the question arises of when either party can choose to cease the reinsurance in respect of future new business. Reinsurance treaties can either be written on a "continuous" or "term" basis. A continuous contract has no predetermined end date, but generally either party can give 90 days notice to cancel or amend the treaty for new business. A term agreement has a built-in expiration date. It

SECTION 20

#1732780561209

1210-679: The Great Fire of London , which in 1666 devoured more than 13,000 houses. The devastating effects of the fire converted the development of insurance "from a matter of convenience into one of urgency, a change of opinion reflected in Sir Christopher Wren 's inclusion of a site for 'the Insurance Office' in his new plan for London in 1667". A number of attempted fire insurance schemes came to nothing, but in 1681, economist Nicholas Barbon and eleven associates established

1265-602: The September ;11 attacks , a jury deliberated insurance payouts for the destruction of the World Trade Center . Leaseholder Larry A. Silverstein sought more than $ 7 billion in insurance money; he argued two attacks had occurred at the WTC. Its insurers—including Chubb Corp. and Swiss Reinsurance Co.—claimed the "coordinated" attack counted as a single event. In December 2004 the federal jury arrived at

1320-782: The governance effect insurance/cedent companies can have on society, reinsurers can indirectly have societal impact as well, due to reinsurer underwriting and claims philosophies imposed on those underlying carriers which affects how the cedents offer coverage in the market. However, reinsurer governance is voluntarily accepted by cedents via contract to allow cedents the opportunity to rent reinsurer capital to expand cedent market share or limit their risk. Property insurance Property insurance provides protection against most risks to property , such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance , earthquake insurance , home insurance , or boiler insurance . Property

1375-427: The reinsurer (1 line each). The maximum automatic underwriting capacity of the cedent would be $ 1,000,000 in this example. Any policy larger than this would require facultative reinsurance. Under non-proportional reinsurance the reinsurer only pays out if the total claim(s) suffered by the insurer exceed a stated amount, which is called the "retention" or "priority". For instance the insurer may be prepared to accept

1430-509: The Consumer Choice Act (H.B. 1171). The bill would have trumped state regulation, and allowed Florida's biggest insurance companies to establish their own rates. Remarking upon State Farm's pullout from Florida, Ted Corless , a property insurance attorney who has represented large insurance carriers like Nationwide , noted "that homeowners are really going to have to look out for themselves". Five days after Crist vetoed

1485-404: The Consumer Choice Act, Corless defended property insurance deregulation by pointing out that "if the blue-chip insurance companies wanted to price themselves out of the market", then they would go out of business. He accused Crist of making choices on behalf of consumers, not protecting their right to choose. In 2006 the average Florida annual insurance premium was $ 1,386 for a homeowner, one of

1540-653: The European Union for insuring a bridge in Crimea . On March 15, 2022, Sogaz came under UK sanctions, the company's accounts were frozen, and UK residents were prohibited from conducting financial activities with Sogaz. On October 28, 2022, Sogaz was included in Canada’s sanctions list. On June 12, 2024, Sogaz was included in the US blocking sanctions list against the "architecture of the Russian financial system of Russia", as

1595-576: The Financial Strength Rating of "B++" (Good) and the Long-Term Issuer Credit Rating of "bbb" and revised the outlooks to "stable" from "negative". The Standard & Poor's rating agency first assigned SOGAZ a long-term insurer financial strength and issuer credit ratings in 2008. Since then, the ratings has gradually grown and in 2018 the agency assigned a ratings of "BBB" with a "stable" outlook, which

1650-562: The above examples concern reinsurance contracts (treaty contracts) that cover more than one policy. Reinsurance can also be purchased on a per policy basis, in which case it is known as facultative reinsurance . Facultative reinsurance can be written on either a proportional or excess of loss basis. Facultative reinsurance contracts are commonly memorialized in relatively brief contracts known as facultative certificates and often are used for large or unusual risks that do not fit within standard reinsurance treaties due to their exclusions. The term of

1705-404: The actual reconstruction value of the home. In case of a fire, household content replacement is tabulated as a percentage of the value of the home. In case of high-value items, the insurance company may ask to specifically cover these items separate from the other household contents. One last coverage option is to have alternative living arrangements included in a policy. If property damage caused by

Sogaz - Misplaced Pages Continue

1760-406: The allied perils. With multiple extensions, this policy not only keeps your property secure but also lessens the extent of the loss or damage that you may suffer causing a huge financial burden, and thus, it provides you relief from such anxiety. The risks covered are as follows: The following causes of loss are covered: The following are excluded from insurance coverage: Claims In the event of

1815-410: The capacity to write more business and/or at larger limits. The insurance company may be motivated by arbitrage in purchasing reinsurance coverage at a lower rate than they charge the insured for the underlying risk, whatever the class of insurance. In general, the reinsurer may be able to cover the risk at a lower premium than the insurer because: The insurance company may want to avail itself of

1870-508: The cedent's gross premium income during a 12-month period, with limit and deductible expressed as percentages and amounts. Such covers are then known as " stop loss " contracts. A basis under which reinsurance is provided for claims arising from policies commencing during the period to which the reinsurance relates. The insurer knows there is coverage during the whole policy period even if claims are only discovered or made later on. All claims from cedent underlying policies incepting during

1925-449: The cedent's insurance policy limits are greater than the reinsurance retention. For example, an insurance company might insure commercial property risks with policy limits up to $ 10 million, and then buy per risk reinsurance of $ 5 million in excess of $ 5 million. In this case a loss of $ 6 million on that policy will result in the recovery of $ 1 million from the reinsurer. These contracts usually contain event limits to prevent their misuse as

1980-454: The cost of repairing or replacing the property with like kind & quality regardless of depreciation or appreciation. Premiums for this type of coverage are based on replacement cost values, and not based on actual cash value. Actual cash value coverage provides for replacement cost minus depreciation . Extended replacement cost will pay over the coverage limit if the costs for construction have increased. This generally will not exceed 25% of

2035-437: The event of a loss, the policyholder would claim against the local insurer under the local insurance policy, the local insurer would pay the claim and would claim reimbursement under the reinsurance contract. Such an arrangement is called "fronting". Fronting is also sometimes used where an insurance buyer requires its insurers to have a certain financial strength rating and the prospective insurer does not satisfy that requirement:

2090-478: The expertise of a reinsurer , or the reinsurer's ability to set an appropriate premium, in regard to a specific (specialised) risk. The reinsurer will also wish to apply this expertise to the underwriting in order to protect their own interests. This is especially the case in Facultative Reinsurance. By choosing a particular type of reinsurance method, the insurance company may be able to create

2145-635: The first fire insurance company, the "Insurance Office for Houses", at the back of the Royal Exchange to insure brick and frame homes. Initially, 5,000 homes were insured by Barbon's Insurance Office. In the wake of this first successful venture, many similar companies were founded in the following decades. Initially, each company employed its own fire department to prevent and minimize the damage from conflagrations on properties insured by them. They also began to issue ' fire insurance marks ' to their customers; these would be displayed prominently above

2200-564: The highest in the country. In May 2022, Florida lawmakers have signed off on quick fixes to the state's property insurance crisis but critics say the plan pays little attention to the growing threat of climate change. Governor Ron DeSantis signed bipartisan legislation implementing the most significant and comprehensive property insurance reforms Florida has seen in decades to provide short- and long-term relief to Floridians to combat skyrocketing insurance costs. Fire insurance business in India

2255-518: The insurance company would only recover from reinsurers in the event of multiple policy losses in one event (e.g., hurricane, earthquake, flood). Aggregate XL affords a frequency protection to the reinsured. For instance if the company retains $ 1 million net any one vessel, $ 5 million annual aggregate limit in excess of $ 5m annual aggregate deductible, the cover would equate to 5 total losses (or more partial losses) in excess of 5 total losses (or more partial losses). Aggregate covers can also be linked to

Sogaz - Misplaced Pages Continue

2310-409: The limit. When obtaining an insurance policy, the limit is the maximum amount of benefit the insurance company will pay for a given situation or occurrence. Limits also include the ages below or above what an insurance company will not issue a new policy or continue a policy. This amount will need to fluctuate if the cost to replace homes in a neighborhood is rising; the amount needs to be in step with

2365-410: The losses it might incur from a small number of large claims as a result of random fluctuations in experience. In a 9 line surplus treaty the reinsurer would then accept up to $ 900,000 (9 lines). So if the insurance company issues a policy for $ 100,000, they would keep all of the premiums and losses from that policy. If they issue a $ 200,000 policy, they would give (cede) half of the premiums and losses to

2420-891: The main door to the property in order to aid positive identification. One such notable company was the Hand in Hand Fire & Life Insurance Society , founded in 1696 at Tom's Coffee House in St Martin's Lane in London . The first property insurance company still extant was founded in 1710 as the Sun Fire Office and is now, through many mergers and acquisitions, the RSA Insurance Group . In Colonial America , Benjamin Franklin helped to popularize and make standard

2475-474: The other companies subscribing to the contract are called following reinsurers. Alternatively, one reinsurer can accept the whole of the reinsurance and then retrocede it (pass it on in a further reinsurance arrangement) to other companies. Using game-theoretic modeling, Professors Michael R. Powers ( Temple University ) and Martin Shubik ( Yale University ) have argued that the number of active reinsurers in

2530-418: The period of the reinsurance contract are covered even if they occur after the expiration date of the reinsurance contract. Any claims from cedent underlying policies incepting outside the period of the reinsurance contract are not covered even if they occur during the period of the reinsurance contract. A Reinsurance treaty under which all claims occurring during the period of the contract, irrespective of when

2585-572: The practice of insurance, particularly Property insurance to spread the risk of loss from fire, in the form of perpetual insurance . In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire . Franklin's company refused to insure certain buildings, such as wooden houses, where the risk of fire was too great. There are three types of insurance coverage. Replacement cost coverage pays

2640-417: The premiums and will pay the stated percentage of claims. In addition, the reinsurer will allow a "ceding commission " to the insurer to cover the costs incurred by the ceding insurer (mainly acquisition and administration, as well as the expected profit that the cedent is giving up). The arrangement may be "quota share" or "surplus reinsurance" (also known as surplus of line or variable quota share treaty) or

2695-478: The prospective insurer may be able to persuade another insurer, with the requisite credit rating, to provide the coverage to the insurance buyer, and to take out reinsurance in respect of the risk. An insurer which acts as a "fronting insurer" receives a fronting fee for this service to cover administration and the potential default of the reinsurer. The fronting insurer is taking a risk in such transactions, because it has an obligation to pay its insurance claims even if

2750-403: The reinsurer becomes insolvent and fails to reimburse the claims. Many reinsurance placements are not placed with a single reinsurer but are shared between a number of reinsurers. For example, a $ 30,000,000 excess of $ 20,000,000 layer may be shared by 30 or more reinsurers. The reinsurer who sets the terms (premium and contract conditions) for the reinsurance contract is called the lead reinsurer;

2805-414: The risk is defined for each separate policy, while under non-proportional reinsurance the reinsurer's liability is based on the aggregate claims incurred by the ceding office. In the past 30 years there has been a major shift from proportional to non-proportional reinsurance in the property and casualty fields. Almost all insurance companies have a reinsurance program. The ultimate goal of that program

SECTION 50

#1732780561209

2860-536: The treaties reinsure and the dollars involved in the transactions. They rely heavily on industry practice. There are not "standard" reinsurance contracts. However, many reinsurance contracts do include some commonly used provisions and provisions imbued with considerable industry common and practice. Sometimes insurance companies wish to offer insurance in jurisdictions where they are not licensed, or where it considers that local regulations are too onerous: for example, an insurer may wish to offer an insurance programme to

2915-441: The underlying policies incepted, are covered. Any losses occurring after the contract expiration date are not covered. As opposed to claims-made or risks attaching contracts. Insurance coverage is provided for losses occurring in the defined period. This is the usual basis of cover for short tail business. A policy which covers all claims reported to an insurer within the policy period irrespective of when they occurred. Most of

2970-511: Was then annually confirmed. At the beginning of 2021, the company had a 'BBB" ratings with "stable" outlook». In July 2003, the Expert RA rating agency assigned SOGAZ the highest "A++" rating (by national rating scale). Since then, the rating has never been reduced and in July 2017, when switching to a new rating scale, it was replaced with the “ruAAA” rating. At the beginning of 2022, the rating

3025-566: Was “ruAAA”, the outlook is “stable”. SOGAZ carries out a consistent and active policy on the purchase of attractive insurance assets. The objects of such purchases are always captive insurers and insurance companies focused on corporate insurance, except VTB Insurance which had been a subsidiary of VTB Bank . SOGAZ acquired 7 notable companies in the Russian insurance market: In December 2021 SOGAZ has also acquired all 45% indirect stake of USM, headed by Alisher Usmanov , in VK (company) , mentioned as

#208791