Lesson Notes By Weeks and Term - Senior Secondary 1

Reinsurance

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Term – 3rd Term

Week: 7

Class: Senior Secondary School 1

Age: 15 years

Duration: 40 minutes of 2 periods each

Date:       

Subject:      Insurance

Topic:-       Reinsurance

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

  1. Define reinsurance
  2. State the benefits of reinsurance
  3. List and explain the types of reinsurance

INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

PRESENTATION

TEACHER’S ACTIVITY

STUDENT’S ACTIVITY

STEP 1

INTRODUCTION

The teacher reviews the previous lesson on renewal

Students pay attention

STEP 2

EXPLANATION

He defines reinsurance and states its benefits

 

 

Students pay attention and participates

STEP 3

DEMONSTRATION

He lists and explains the types of reinsurance

Students pay attention and participate

STEP 4

NOTE TAKING

The teacher writes a summarized note on the board

The students copy the note in their books

 

NOTE

REINSURANCE

Reinsurance, often referred to as insurance for insurance companies, is a

contract between a reinsurer and an insurer. In this contract, the insurance

company—known as the ceding party or cedent—transfers some of its

insured risk to the reinsurance company. The reinsurance company then

assumes all or part of one or more insurance policies issued by the ceding

party.

NOTE:

  • Reinsurance, or insurance for insurers, transfers risk to another company to reduce the likelihood of large payouts for a claim.
  • Reinsurance allows insurers to remain solvent by recovering all or part of a payout.
  • Companies that seek reinsurance are called ceding companies.
  • Types of reinsurance include facultative, proportional, and non-proportional.

 

How Reinsurance Works

Reinsurance allows insurers to remain solvent by recovering some or all

amounts paid out to claimants. Reinsurance reduces the net liability on

individual risks and catastrophe protection from large or multiple losses.

The practice also provides ceding companies, those that seek reinsurance,

the chance to increase their underwriting capabilities in number and size of

risks. Ceding companies are insurance companies that pass their risk on to

another insurer.

 

Benefits of Reinsurance

  1. By covering the insurer against accumulated liabilities, reinsurance gives

the insurer more security for its equity and solvency by increasing its ability

to withstand the financial burden when unusual, major events occur.

  1. Insurers are legally required to maintain sufficient reserves to pay all

potential claims from issued policies.

  1. Through reinsurance, insurers may underwrite policies covering a larger

quantity or volume of risk without excessively raising administrative costs to

cover their solvency margins.

  1. Reinsurance makes substantial liquid assets available to insurers in the

event of exceptional losses.

 

Types of Reinsurance

  1. Facultative coverage protects an insurer for an individual or a specified

Risk or contract. If several risks or contracts need reinsurance, they are

renegotiated separately. The reinsurer holds all rights for accepting or

denying a facultative reinsurance proposal.

  1. A reinsurance treaty is for a set period rather than on a per-risk or

contract basis. The reinsurer covers all or part of the risks that the insurer

may incur.

 

EVALUATION:    1. Define reinsurance

  1. How does reinsurance work?
  2. State three benefits of reinsurance
  3. List and explain the types of reinsurance

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively