1. What Are the Advantages and Disadvantages of Combining Several Classes of Accident Business in One Treaty?

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ADVANTAGES • Some of the accident subclasses are very inactive to such an extent that it becomes costly to create stand-alone treaty programmes. (for admin purposes its ideal) • In the event of an in-determinant claim(where we are not sure of the specific class of the risk) it solves misunderstandings that might occur as to the settling of the claim (.e.g. Misc. Accident treaty) • Creating one treaty for several classes of accident facilitates easier claims handling,& management in instances were claims are arising from several subclasses.( claims handling) • Assists in management of reinsurance costs, avoids duplication of payments, and in the process it’s possible to obtain rebates in view of other relatively inactive subclasses. (The rebate is pre-negotiated and is usually a portion of the premium paid by the policy holder). • Under accident business the classes can be so numerous to itemize individually such that creating individual treaties for could leave some uncovered.it also avoids omission, or oversight of possible exposures that might occur later, but for example with Misc. Accident Treaty any peril or event falling within the scope of the risk is covered even if it was’nt specifically mentioned. • A single loss event can affect more than one class, and under one treaty the reinsurer pays once instead of different cases, claims handling and settlement is made easy. DISADVANTAGES • There is a disadvantage on the part of the reinsured or insurer in that you end up paying premiums for classes you don’t necessarily have exposure on, as the are many silent classes. e.g. One wants to be covered for Professional Indemnity, Personal Accident, and Directors liability, but under the Misc. Accident, they end up paying for other classes like Householders, bankers blanket which they are not exposed to. • In the event of a poor claims

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