Reinsurance is simply another form of insurance, but this time an insurer takes out the policy. Having accepted a risk, the insurer is really in much the same position as the insured in relation to the various uncertainties associated with the risk. So, direct insurers (here, ceding company) see that they have risks that they wish to transfer to other insurance company (ies) called reinsurers. It is not unusual for reinsurers to repeat the process, which is called "retrocession".
The reinsurance practice can be done in two main ways as follows, though there are some other ways which are not as important/usual as the following are:
Facultative: is when the ceding company approaches reinsurers to get their policies reinsured individually, if needed. However, reinsurers are free to accept or decline the ceding company's proposal as the ceding company is also free to decline the reinsurers' acceptance.
Treaty: this is an agreement between the ceding company and, usually, a number of reinsurers who agree in advance to accept businesses, usually a huge number of policies, or some portfolios in one or more lines of business, ceded to them by the ceding company.
Reinsurance in Bimeh Iran: reinsurance practice in Bimeh Iran is done by a department called "Reinsurance Department". Almost all types of reinsurance business have been practicing in Reinsurance Department. These types include both Outward and Inward reinsurance (even acceptance from abroad) as well as retrocession in different forms of treaties and facultative.
In Outward business, Bimeh Iran's capacity to retain each and every risk is equal to IRL. 14,590,741,000,000, while the rest of the market (23 insurance companies) can totally retain IRL. 15,260,052,000,000 on each and every risk.
Also, for our Inward business (Facultative only), Bimeh Iran can accept the same amount in each and every risk (i.e. IRL. 14,590,741,000,000), while the rest of the market (23 insurance companies plus two reinsurance companies) can totally accept only IRL. 3,407,681,000,000 on each and every risk.
For our Inward business (Treaties only), Bimeh Iran can accept the same amount in each and every risk (i.e. IRL. 14,590,741,000,000), while the rest of the market (23 insurance companies plus two reinsurance companies) can totally accept only IRL. 848,755,000,000 on each and every risk.
Mrs. sh. Noori