Re-Insurance Is The Viable Solution For Risk Management – UAE LAW

Re-Insurance Is The Viable Solution For Risk Management – UAE LAW

Re-Insurance Is The Viable Solution For Risk Management – UAE LAW The Concept: re–insurance is a contract concluded between an insurance company and another WhatsApp: +971555570005

Re-Insurance Is The Viable Solution For Risk Management – UAE LAW

Re-Insurance Is The Viable Solution For Risk Management

The Concept:
re–insurance is a contract concluded between an insurance company and another insurance company named the re-insurer, whereby the insurance company pays part of the insurance premiums which received from the insured to the (re -insurance company) that ensure correspondingly covering some portion of the losses. this is a method by which the insurance company use for risk management, accordingly, if the damage stated in the insurance policy happened the insured will demand the insurance company for the compensation payable for the loss .and then The insurance company shall, in turn, demand the re-insurance company to pay part of the compensation in accordance with the agreement concluded between them.

Importance:
To clarify the content of re-insurance we resort to the following example:
If, for example, it is estimated that in each thousand insured five risks are happened, the amount of the compensation is about 50,000 dirhams. The amount of the net insurance premium must be 50 dirhams so the company will receive from thousand insured fifty thousand dirhams covering the estimated damages. and the company must have precaution to address such obligations, but it could not rest assured to this estimate fully in the face of its obligations. It must take into its calculation that this estimation is approximate and may be wrong. This error decrease as the number of insured increase according to the law of abundance, but however the risk however it will remain , seven risk may happen instead of five , and the compensation payable will be seventy thousand instead of fifty thousand , but there may be only two risks, but compensation payable for them is 80 thousand instead of fifty thousand, then the company must face the possibility of this risk and the resulting differences in the calculation , so it can be able to face its obligations towards insured , and so the insured be assured the company’s ability to cover the losses they may suffered, which is the basis of the insurance process.
And the methods used by the company to achieve this purpose is the re-insurance, and in this example we presented the capacity of the insurance company to face its commitments fifty thousand, and we have seen that there is a possibility even far as its obligations can reach seventy or eighty thousand, so the insurance company resort to a company of re-insurers to insure itself from This possibility.
The re-insurance contract is a contract between the insurance company and the re-insurer, whereby the first transfer to the second a part of the risks that he incurs in return for any material amount while the insured remains the sole debtor of the insured. If the probably is that the insurance company transfer to re- insurer part of the risks, it is valid for him to transfer all his risks while he remains the sole debtor for the insured, and the precaution is what indicates the re-insurer to re-insurance as we have provided, especially in the insurance against damages.

Re-insurance by re-insurer:
Since the re-insurer considered the insurer for the direct insurer, he may in need for re-insurance with a second re-insurer, through limiting his capacity in re-insurance, and if this capacity increase it will return the re –insurance , this is called re-insurance by the re-insurer , The re-insurance by the re-insurer is a contract between the first re-insurer and the second re-insurer, as the first transfer to the second re-insurer part of the risk that he has to re-insurance incurs it in return for any material considerations , and the reinsurance is agreed upon by the re-insurer with re-insurance in nature and composition And relics , which is only re-insurance in the second degree , whereas the re-insurance by re-insurer is usually happen in the form of re- insurance by setting-off .
In this way, we have explained the concept of re-insurance as a process where insurance companies resort to the necessity of assisting the company in managing the risk, and we have relied on our long experience in dealing with these issues. We have been tasked in many insurance and re-insurance cases in our office,

Attorney / Mohamed Al Marzooqi
Mohamed Al Marzooqi Advocates & Consultancy
Lawyer in Abu Dhabi, Dubai – UAE

Re-Insurance Is The Viable Solution For Risk Management – UAE LAW The Concept: re–insurance is a contract concluded between an insurance company and another WhatsApp: +971555570005

“Re-Insurance Is The Viable Solution For Risk Management – UAE LAW”