The above list is not designed as included. Further changes and changes may be necessary depending on the content of the agreement submitted. Reinsurance allows insurers to remain solvent by recovering one or all of the amounts paid to applicants. Reinsurance reduces net liability to individual risks and civil protection before large or multiple losses. The practice also provides that companies seeking reinsurance are able to increase their insurance capacity in terms of number and size of risk. With respect to solvency, the issue of recoverable reinsurance, the reinsurer`s payments is due. In the mid-1980s, some reinsurance companies that entered reinsurance during the period of high interest rates in the early 1980s left the market due to bankruptcies or other problems. (When interest rates are high, some insurance and reinsurance companies try to increase their market share in order to have more premiums for investments. People who do not pay attention to the risk-taking of the business they will depreciate may ultimately pay unduly for coverage and, therefore, go bankrupt.) As a result, some insurers that reassurance with these businesses that no longer existed were unable to recover the funds they had on their reinsurance contracts.
The reinsurer`s liability generally covers the entire life of the original insurance once it is written. However, the question arises as to when one of the parties will be able to cease reinsurance for future new transactions. Reinsurance contracts can be written either on an ongoing or “term” basis. A permanent contract does not have a predetermined deadline, but as a general rule, each party can terminate 90 days or change the contract for new transactions. A due agreement has an integrated expiry date. It is customary for insurers and reinsurers to maintain long-term relationships that span many years. Reinsurance contracts are generally longer documents than discretionary certificates, which contain many of their own conditions, which differ from the conditions of the direct insurance policies they reinsure.