PINS S5.2 Risk management policy — reinsurance risk

An insurer's risk management policy for reinsurance risk should include:

(a) the insurer's objectives (within its risk tolerance) for reinsurance management;
(b) the process for selection of reinsurance brokers and advisers;
(c) the processes for prudent and sound selection, management and monitoring of its reinsurance programme;
(d) managerial responsibilities and controls;
(e) the methods for determining all aspects of a reinsurance programme, including:
(i) identification and management of aggregations of risk exposures;
(ii) selection of probable maximum loss factors;
(ii) selection of realistic adverse scenarios, return periods and geographical aggregation areas; and
(iv) identification and management of vertical and horizontal coverage of the programme;
(f) the process for ensuring that there is accurate and complete reinsurance documentation;
(g) the selection of participants in reinsurance contracts, including the criteria and procedures to ensure, and monitor, their diversity and creditworthiness;
(h) the procedures for identifying actual and potential credit exposures to individual reinsurers or groups of connected reinsurers on programmes that are already in place; and
(i) the processes for entering into a limited risk transfer arrangement.
Inserted by QFCRA RM/2013-1 (as from 1st January 2015).