Reinsurance plays a crucial role in helping insurance companies, known as cedants, manage risk and stabilize their financial portfolios. However, the complexity of reinsurance agreements between cedants and reinsurers creates unique actuarial challenges. Accurate reinsurance is essential for maintaining financial transparency, ensuring regulatory compliance, and managing risk effectively. This blog explores the challenges of reinsurance
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Frequency and severity are fundamental metrics in the insurance industry. Many traditional actuarial models depend on these assumptions to build pricing models. However, relying solely on frequency and severity can be misleading, and a deeper understanding is required to accurately assess risk. The Homeowners Insurance Example Take, for instance, the fire risk in homeowners insurance.