Question ID: 1267
Regulation Reference: (EU) No 2015/2450 - templates for the submission of information to the supervisory authorities
Article: 35
Status: Final
Date of submission: 18 Oct 2017
Question
Let us assume A is the leading insurer of a contract with total SI 100 but there is a coinsurance treatment with share of insurer A of 65%.
Facultative cover is 25 xs 50 and obligatory cover 30 xs 20. Net retention of inurer A would be 10.
What should be filled into C0090, C0130, C0140 and C0150?
EIOPA answer
In the example provided and assuming A does not have joint and several liability with the co-insurer:
C0090 should be 65 (=100 * 65%).
C0130 would depend on whether the 25 xs 50 facultative reinsurance covers the whole risk or A's share of the risk. If the facultative reinsurance covers the whole risk then C0130 should be 16,25 (= 25 * 65%). If the facultative reinsurance covers A's share then C0130 should be 15.
Typical market practice is that obligatory cover applies to an undertaking's share of the risk (not the whole risk). Therefore if the facultative reinsurance covers the whole risk then C0140 (sum reinsured under the 30 xs 20 obligatory cover) should be 28,75 (=min[75*65% -20, 30]). If the facultative reinsurance covers A's share then C0140 should be 30 (= min [50-20, 30]).
If the facultative reinsurance covers the whole risk then C0150 should be 20 (=65 -16,25 – 28,75). If the facultative reinsurance covers A's share then C0150 should be 20 (=65 -15 -30).