Conquer the CAS Challenge 2025 – Your Ultimate Actuarial Adventure Awaits!

When utilizing a working cover agreement, primary insurers must have a solid understanding of the frequency and severity of losses associated with the types of insurance they are covering, particularly if these are unfamiliar or new areas. Working cover agreements provide insurers with additional capacity and support for certain risks, but understanding the potential loss characteristics is crucial for effective risk management.

By analyzing the frequency (how often losses occur) and severity (the potential size of the losses) for unfamiliar types of insurance, insurers can accurately assess their risk exposure and make informed decisions regarding coverage limits, premiums, and mitigation strategies. This knowledge will help insurers avoid unexpected financial burdens and ensure that their working cover agreements are appropriate for the risks they are underwriting.

In contrast, understanding expected profit margins, advantages of syndicates, or regulations affecting reinsurance agreements, while significant in their own right, does not directly address the immediate and critical need for insight into the specific risks being covered in the context of a working cover agreement.