Casualty Actuarial Society (CAS) Practice Exam

What is the role of a reinsurance intermediary?

1. To act as a policyholder representative

2. To develop a reinsurance program and negotiate contracts

3. To assess claim damages independently

4. To manage regulatory compliance for insurers

The correct answer is: To develop a reinsurance program and negotiate contracts

The role of a reinsurance intermediary primarily revolves around developing a reinsurance program and negotiating contracts on behalf of their clients, typically insurance companies. This function is critical in the reinsurance market, where intermediaries leverage their expertise and market knowledge to help insurers find suitable reinsurance coverage that meets their risk management needs. By assessing the insurer's requirements, the intermediary can tailor a reinsurance program that effectively distributes risk. They negotiate terms, pricing, and conditions with various reinsurers, thus facilitating the transfer of risk from insurers to reinsurers. This process not only helps insurers secure better terms and conditions but also optimizes their capital management. The intermediary's expertise enables them to navigate complex reinsurance structures and present the most advantageous options to their clients. The other options do not encompass the primary role of a reinsurance intermediary. While policyholder representation, claim assessment, and regulatory compliance are important aspects of the insurance industry, they fall outside the specific duties of reinsurance intermediaries. Instead, those functions are generally handled by other professionals within the insurance or legal sectors.