Yearly Renewable Term Plan of Reinsurance
Candlefocus EditorWith this type of reinsurance, the primary insurance company is able to reduce the financial burden of their premiums and could provide more coverage to policyholders, at little cost to the primary insurance company. It is considered an efficient way of managing risk and capitalization requirements throughout the lifecycle of an insurance product. It also gives the primary insurer access to more capital, as the reinsurer can free up existing capital and spread risk throughout the portfolio.
Yearly renew term reinsurance is advantageous because the reinsurance premiums paid by the ceding company are reviewed annually. This gives the primary insurance company the flexibility to adjust the premiums to reflect any changes in the policyholder’s age. Since the premiums renew each year, the company can reassess each policy and decide whether to continue with the same rate or whether to increase or decrease the amount of premiums.
YRT reinsurance offers primary insurance companies the opportunity to spread risk, reduce costs and increase access to capital. As long as the primary insurance company is able to properly manage their reinsurance contracts and assess their risk, this type of reinsurance could be a great way for them to reduce the cost of providing insurance to their customers.