 |
| Market Practice in respect of the claims Payout |
| Trust Alliance adopts the principle of “follow the leader”. The rationale behind this principle is that leading reinsurer e.g. Munich Re, biggest provider of capacity for natural catastrophe risks worldwide, can draw an outstanding scientific and underwriting expertise, and has unparalleled financial resources. The Munich Re has devoted itself for many decades to the geoscientific analysis of natural catastrophe risks, especially earthquake, windstorm and flood, and has developed underwriting methods for dealing with them. (If such a well-established reinsurer has paid a claim, smaller reinsurers have no or little reasons not to pay up.) “Followers” prefer to follow their leader because of the following reasons: (1) It is not economically justifiable for “follower” to investigate the claim if its leader, who has greater expertise and knowledge in reinsuring the risk, has already paid the claim. (2) Lower operational costs involved in the settlement of losses. “Follow the leader” is not restricted to claims settlement only. The follower gives authority to the leader to negotiate with the cedant or broker on all aspects on the treaty (including claims payment). (3) Expedites the claims settlement process |
|
 |
 |
|