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ARA 440 — Reinsurance Administration

Course Type: Course Portal, Traditional Designation Course
Topics: Reinsurance
Designations: ACS, ARA, PFLP
Language: English, Portuguese


Overview

ARA 440 shows how reinsurance strengthens the insurance industry and increases the likelihood that insurance companies will have sufficient funds to pay anticipated claims. This course also discusses reinsurance principles, regulation of reinsurance, typical provisions in a reinsurance agreement, the administration of reinsurance business, and the importance of quality control for reinsurance.

Topics

  • Introduction to Reinsurance
  • Reinsurance Environment
  • Regulation of Reinsurance
  • Forms of Reinsurance
  • Defining the Reinsurance Coverage
  • Reinsurance Administration Procedures
  • Claims, Rescission, and Potential Problems
  • Financial Arrangements for Reinsurance
  • Risk Management and Reinsurance
  • Managing Retention Limits
  • Reinsurance Activities, Staff, and Systems
  • Administering New Business
  • Administering In-Force Business and Terminations of Reinsurance
  • Quality Control in Reinsurance

Part 1: Reinsurance Overview

Chapter 1: Introduction to Reinsurance

Roles of Insurance Companies in Reinsurance Arrangements

Professional and Occasional Reinsurance Providers

Captive Reinsurers

Reciprocal Arrangements

Reinsurance Pools

Assumption and Indemnity Reinsurance

Assumption Reinsurance

Indemnity Reinsurance

Exchanges of Funds in Indemnity Reinsurance

Benefits and Costs of Reinsurance to the Direct Writer

Documentation of Reinsurance Arrangements

The Reinsurance Industry

Chapter 2: Regulation of Reinsurance

United States Reinsurance Regulation

The National Association of Insurance Commissioners

NAIC Accreditation of State Insurance Departments

Licensing Requirements

Licensing Requirements - Direct Writers

Licensing Requirements - Reinsurers

Licensing Requirements - Reinsurance Intermediaries

Monitoring Financial Condition

Financial Reports

Capital and Surplus Requirements

On-Site Regulatory Examinations

Reserves and Reserve Credit

Reserve Credit for Reinsurance

Forms of Security for Reinsurance

Risk Transfer

Chapter 3: Forms of Reinsurance

Cession Arrangements in Reinsurance

Automatic Reinsurance

Faculative Reinsurance

Faculative-Obligatory Reinsurance

Comparison of Cession Arrangements

Nonproportional and Proportional Reinsurance Plans

Nonproportional Reinsurance

Proportional Reinsurance

The Cession Amount in Proportional Reinsurance

Excess-of-Retention Arrangements

Quota Share Arrangements

Basic Coinsurance

Coinsurance Premiums

Funds Withheld Coinsurance

Modified Coinsurance

Yearly Renewable Term Reinsurance

Part 2: The Reinsurance Agreement

Chapter 4: Defining the Reinsurance Coverage

Reasons to Use Written Reinsurance Agreements

Life Cycle of the Reinsurance Agreement

Choosing a Reinsurance Partner

Evaluation Criteria Used by Direct Writers

Evaluation Criteria Used by Reinsurers

General Characteristics of a Reinsurance Agreement

Common Agreement Provisions

Scope of the Agreement

Parties to the Agreement Provision

Entire Agreement Provision

Duration of the Agreement Provision

Recapture Provision

Termination of the Agreement

Insurance Ceded and Reinsurance Provided

Reinsurance Coverage Articles

Schedules of Reinsurance Coverage

Chapter 5: Reinsurance Administration Procedures

Methods of Reinsurance Record Administration

Individual Cession Administration

Self Administration

Bulk Administration

Procedures to Begin Reinsurance Coverage

Notification for Automatic Reinsurance

Notification for Facultative-Obligatory Reinsurance

Notification for Facultative Reinsurance

Reasons Why Reinsurance May Not Be in Effect

Reporting Requirements

Records Inspection

Provisions for Changes to the Reinsurance

Provisions for Increases in Retention Limits and Recapture

Provisions for Increasing Death Benefits

Continuations Provision

Conversions Provision

Reinstatements Provision

Provisions for Reductions and Terminations of Reinsurance

Chapter 6: Claims, Recission, and Potential Problems

Claim Administration

The Direct Writer's Authority to Handle Claims

Claim Procedures

Recission

Potential Problems Between a Direct Writer and a Reinsurer

Error and Omissions

Arbitration

Insolvency

Direct Writer Insolvency

Reinsurer Insolvency

Chapter 7: Financial Arrangements

Reinsurance Premiums and Allowances

Premium Rate Tables

Reinsurance Premium Reporting and Payment

Paying Premiums for Coinsurance, Modco, and YRT Reinsurance

Nonpayment of Reinsurance Premiums

Reinsurance Premium Rate Changes

Reinsurance Premium Reporting

Allowances

Miscellaneous Other Payments Under Coinsurance and Modco

Policy Cash Values

Policy Dividends

Experience Refunds

Modco Reserve Adjustments

Provision for Premium Taxes

Currency for Reinsurance

Currency Fluctuations

Consequences for Late Payment Due to Decreases in Currency Exchange Values

Chapter 8: Risk Management and Reinsurance

Approaches to Risk Management

Balancing Risks and Returns

Leverage

Positive and Negative Leverage Effects

Leverage Ratios

Surplus Strain and Surplus Relief

The Surplus Relief Ratio

Retention Limits: Mechanisms for Redistributing Risks

Types of Retention Limits

Cession Basis and Retention Limits

Retention Limit Corridors

Setting, Monitoring, and Changing Retention Limits

Influences on Retention Limits

Changing Retention Limits

Limitations of Reinsurance

Limitations of a Direct Writer

Limitations for a Reinsurer

Part 3: Reinsurance Administration

Chapter 9: Reinsurance Activities, Staff, and Systems

Reinsurance Administration Activities

Reinsurance Administration Staff

Reinsurance Analysts

Other Staff Involved in Reinsurance Activities

Reinsurance Communications with Third Parties

Reinsurance Intermediaries

Consumer Reporting Agencies

MIB Group, Inc.

Reinsurance Information Systems

Telecommunications

Document Management Systems

Security for Information Systems

Chapter 10: Administering New Business

Preplacement of Reinsurance

Reviewing a Request for Coverage

Establishing Records and Reserving Capacity

Following Up on Reserved Capacity

Placement of Reinsurance

Facultative and Fac-Ob Cessions

Automatic Cessions

Chapter 11: Administering In-Force Business and Terminations of Reinsurance

Administering In-Force Business

Reports Used to Administer In-Force Business

Processing Changes in Reinsurance Coverage

Processing Billing Statements

Recording Policy Reserves

Administering Mergers and Acquisitions

Administering Terminations of Reinsurance

Administering Claims

Establishing the Claim File

Examining the Claim File

Approving the Claim

Settling the Claim

Notifying Retrocessionaires of a Claim

Chapter 12: Quality Control in Reinsurance

Principles of Quality Control

Segregation of Duties

Execution of Transactions as Authorized

Recording of Transactions as Executed

Safeguarding of Assets

Physical Comparison of Recorded Amounts

Control Requirements of the Sarbanes-Oxley Act

Quality Control Approaches

Process Controls

Suspense Account Reconciliation

Data Integrity Checks

Trend Analysis

Checking Overdue Reports

Audits

Internal Audits

External Audits

Desk Audits

Comparison of Internal Audits, External Audits, and Desk Audits

Glossary

Index

Course Format

Course Portals include the following elements:

  • PDFs of the assigned course materials that can be printed or read online
  • The same interactive Practice Questions and Sample Exams currently found in LOMA Test Preparation Guides (TPGs)
  • Recommended study plans to help learners set goals and manage their study schedule
  • A variety of additional media-oriented features designed to enhance the study and review process

Exam Format

The ARA 440 exam has 50 questions and a time limit of 2 hours. The exam is available via I*STAR, Prometric and Paper (November only) formats.

Study Materials

Principles of Reinsurance, Second Edition (LOMA, 2013)
ISBN 978-1-57974-414-4

Test Preparation Guide for ARA 440 (LOMA, 2013)
ISBN 978-1-57974-413-7

Optional printed textbook (not included in bundled fee).

Principles of Reinsurance, Second Edition (LOMA, 2013)
ISBN 978-1-57974-412-0
PBD Order # 440-10-13

About Bundled Study Materials

Some courses ("bundled courses") include study materials with your enrollment. A growing list of English-language courses include access to bundled study materials.

For some of these courses, once you enroll, you gain access to the study materials through your My Learning page in LOMANET. These include the Course Portal courses and the Need 2 Know courses.

How to Enroll

Enrolling for Exams and Bundled Courses

LOMA requires proctored examinations for many of its professional designation courses. Exams are administered in LOMA member organizations and in independent testing locations. This section provides information about exam formats, enrollment procedures for both exams and bundled courses, and exam fees.

LOMA exams vary in length from two–three hours. Consult your Test Preparation Guide (TPG) or see the Designation Study Materials Roadmap for specific information about the length of your exam. As new or revised LOMA courses are released, the number of examination questions for some course examinations may change. If you enroll for a bundled course delivered through a LOMA Course Portal, the assigned study materials are included in your enrollment and are accessible via the Course Portal. Your enrollment process will depend on the type of examination you choose to take:

LOMA offers two options for exam enrollment:

  • Online enrollment via LOMANET, our Internet-based education administration system
  • Enrollment forms for paper exams, for use by independent students only, can be found here.

I*STAR and Paper Exam Center Directories for testing at third-party locations

Retakes

Students who fail exams must pay full dates to retake the exams, in most cases. However, bundled courses (those courses that include exam fees and study materials) have a reduced rate to retake the exam. See LOMA’s Education & Training Catalog for fees.