RE: Loss Portfolio Transfers

Madigan,Kevin M. ( (no email) )
Mon, 17 May 1999 10:39:04 -0500

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Be very very careful. Make sure your underwriters and claims people do a
thorough audit. Some of the questions I would ask:

Why do they want to do this?
Is the transferee an insurance company, a TPA, an SIR? This matters a great
deal in the answer to the above.
Who handles the claims? If not you, are you comfortable with the claims
handler?
Are you comfortable that all the IBNR is really IBNR, and not RBNR (Reported
But Not Recorded, or even IBNRTTCY=Incurred but not reported to the carrier
yet).

I believe the funds are treated as booked premium, and you need to pay
taxes.

> -----Original Message-----
> From: MINOGUE, CAMILLE [SMTP:CAMMIN@SAFECO.com]
> Sent: Monday, May 17, 1999 10:09 AM
> To: 'casnet@lists.casact.org'
> Subject: Loss Portfolio Transfers
>
> I'm currently involved in a loss portfolio transfer, on the receiving end.
> The pricing seems pretty straightforward, but I'd like to make sure I've
> covered everything. Can anyone point me to papers in the actuarial
> literature that could give me some guidance?
>
> If there is anyone out there who has actually gone through a loss
> portfolio
> transfer, any advice on pitfalls to avoid would be greatly appreciated.
> Also, I'm curious about whether there are statutory requirements on how
> such
> a transaction should be booked. In particular, must the funds received
> be
> booked as premium?
>
> Camille Minogue
>
>
>
> Visit the CAS Web Site at http://www.casact.org
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RE: Loss Portfolio Transfers

Be very very =careful. Make sure your underwriters and claims people do a thorough =audit. Some of the questions I would ask:

Why do they want to =do this?
Is the transferee =an insurance company, a TPA, an SIR? This matters a great deal in the =answer to the above.
Who handles the =claims? If not you, are you comfortable with the claims handler?
Are you comfortable =that all the IBNR is really IBNR, and not RBNR (Reported But Not =Recorded, or even IBNRTTCY=3DIncurred but not reported to the carrier =yet).

I believe the funds =are treated as booked premium, and you need to pay taxes.

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