On the territory of the Russian Federation, citizens are guaranteed free medical care. And the mechanism through which this provision is carried out is compulsory health insurance (CHI). Let's take a closer look at how it functions and what is important to remember about it.
Definition
Compulsory health insurance is a special form in which, upon the occurrence of an insured event, the insured person is provided with free medical care in the amount established by the basic compulsory medical insurance program. Refers to the types and is regulated by social insurance legislation.
The essence of the compulsory health insurance system is to guarantee the provision of medical services to all segments of the population of the Russian Federation, regardless of gender, age, or material income.
The compulsory medical insurance system is financed through a regular 3.6% single social tax and from incoming government funds on behalf of the non-working population.
The basis for the provision of these services is the compulsory medical insurance agreement.
Legislation
At the legislative level, compulsory health insurance is regulated by the law adopted on November 29, 2010.
Basic program
As part of the basic program, citizens are provided with primary health care, consisting of preventive care, emergency medical care (with the exception of evacuation), and specialized medical care. A complete list of services provided can be found in Art. 35 of the Law of the Russian Federation “On compulsory health insurance in the Russian Federation”. Among other things, these include treatment:
There are territorial variations of the basic program, but they cannot be (according to Article 36 of the Law of the Russian Federation “On Compulsory Health Insurance in the Russian Federation”) less than the basic level established by the Ministry of Health of the Russian Federation.
Obligations of the policyholder
Compulsory medical insurance is primarily a legal relationship between the policyholder and the insurer (that is, a medical insurance organization that provides medical services to citizens). And it is important to understand what responsibilities and rights the parties have in this relationship.
Who represents compulsory medical insurance
The concept of an insured in compulsory medical insurance may vary depending on for whom the insurance is provided:
- If the non-working population is insured, then this role is played by the state, and specifically by local executive authorities.
- If the working population is insured, then this role is played by either a legal entity of any organizational and legal form, which enters into an insurance contract and subsequently pays the appropriate insurance premiums, or an individual who is an individual entrepreneur.
Rights
The policyholder has the right:
- Participate in any type of health insurance.
- Choose an arbitrary medical insurance organization at your discretion.
- Monitor compliance with the terms of the compulsory medical insurance agreement.
Agreement
A compulsory medical insurance agreement is a document through which insured citizens receive the right to receive medical services.
Responsibility
For failure to comply with applicable laws, the policyholder may be held liable.
Voluntary health insurance in Russia does not have a stable legislative basis. This, in turn, means that a VHI agreement is a document “on trust”, secured not so much by legal liability, but by the reputation of the insurance company and the attentive attitude of the client. What should be in the insurance contract and what should it look like so that the policyholder can defend his interests and receive the required services when an insured event occurs?
The basis of the relationship between the insurer and the insured person in voluntary health insurance is the VHI agreement. It defines the basic rights and obligations of the parties, the list and procedure for the provision of services, and helps resolve disputes.
What is a VHI agreement?
A voluntary health insurance contract is a document that provides the client with the opportunity to receive medical care in the amount specified in the contract, and the insurer to charge a one-time (or regular) fee (insurance premium) for this.
In simple terms, the policyholder buys a voluntary health insurance policy for an amount specified in the contract, and the insurance company pays for the medical services provided to the insured person in accordance with the insurance program and upon the occurrence of insured events. Most Russians are accustomed to using the services of medical institutions under compulsory medical insurance, so they consider VHI an unjustified luxury, but this is not so. In fact, the policies are similar to each other only in the typical name, but they differ very much:
From the comparative table it becomes clear that the VHI policy complements compulsory health insurance, opening the door to the policyholder to the medical world without queues, problems and additional payments.
Sometimes compulsory health insurance and voluntary health insurance programs can work in parallel and in combination with each other. For example, an insured person goes to a clinic at his place of residence under compulsory medical insurance, receiving treatment in a hospital at the expense of the state. If the insurer has an agreement with the same clinic, then under the VHI policy the patient can be accommodated in a paid ward (superior comfort), while the treatment will also be compensated under the compulsory medical insurance policy.
When concluding a contract, the client, with the help of an insurance agent, “can collect” a suitable policy or choose a standard one provided by the insurance company. In any case, the following points must be specified in the voluntary health insurance agreement:
- Full name, passport and contact details of the policyholder;
- Information about the insurer: name, contacts, details;
- Full name and position of the responsible representative of the insurance company signing the contract;
- Selected insurance program;
- Medical centers for assistance and advice;
- List of insured persons and their personal data;
- Insurance conditions;
- Contract time;
- Insurance premiums and payment procedures;
- Sum insured (policy coverage);
- Rights and obligations of the parties;
- Conditions for termination of the agreement;
- Force majeure and other information.
The annex to the VHI agreement must contain a list of insured events and exceptions to them. Otherwise, the insurer may refuse to pay, recognizing any problem as a non-insurable event.
The duration of the agreement is negotiated separately by the parties, most often it is 1 year. If the insurance period is less than 12 months, the amount of the insurance premium is set as a percentage of the annual value. An agreement without specifying a validity period is invalid. The policy begins its work immediately after the parties sign the contract, however, sometimes the contract comes into force on the date specified in the document. Most often, such conditions are prescribed in the VHI, which provides insurance abroad.
Rights and obligations of the parties to VHI insurance
It is necessary to distinguish between VHI for organizations and for individuals. In the first case, the policyholder has the right to receive medical care (or check its provision to the insured person) in accordance with the terms of insurance, as well as change the insured people and their number in agreement with the insurance company. An individual has the right only to medical care in accordance with the terms of the contract - it will not be possible to freely change a person in the policy. Also, the policyholder may, at his own decision, terminate the agreement or make changes to it (by agreement with the insurance company). In this case, he is reimbursed for the part of payments made for the unexpired period. In addition, the insured can seek advice or assistance from the insurer, and receive a duplicate of the policy if it is lost. The responsibilities of the policyholder and the insured persons are described quite precisely in the standard contract. Here are the main ones:
- Make insurance payments on time;
- Inform insured people about the terms of the contract and the insurance program, and the procedure for receiving assistance. Also, in the case of corporate voluntary health insurance, the employer is obliged to transfer voluntary health insurance policies to employees;
- Notify the insurer of any changes affecting the insured;
- Carry out doctors' orders;
- Keep documents and do not transfer them to third parties;
- Return the policy to the insurance company upon early termination of the contract.
The insurer, in turn, has the right to terminate the contract if the terms of payment of insurance payments are violated or, in situations provided for by the contract, refuse payment and/or provision of services. The insurance company can also verify the accuracy of the data provided by the policyholder in any convenient way. The insurer's responsibilities are also clearly stated in the VHI agreement:
- Issue VHI policy(s);
- Ensure the provision of medical care in accordance with the insurance program;
- Pay for services rendered on time;
- Do not disclose confidential data;
- Protect the interests of the insured persons.
The procedure for concluding a voluntary health insurance agreement
Obtaining a voluntary health insurance policy is quite simple, especially if the policyholder has the financial capacity and understanding of what he expects from voluntary health insurance. To do this, just contact the selected insurance company, presenting your passport, and fill out a standard application. At the request of the insurer, to determine the amount of premiums and the degree of risk, it may be necessary to fill out a medical questionnaire indicating reliable information and providing supporting documents.
Next, a suitable insurance program is selected, a list of medical institutions is compiled, and the validity period of the contract is negotiated. Based on the tariffs of the insurance company and health care facilities, the health status of the potential insured person, and the selected insurance program, the amount of the insurance premium is calculated; An agreement of the established form is drawn up and signed by both parties.
After this, the insurer issues the original VHI policy to the insured person, which gives the right to receive services under a voluntary health insurance agreement, and the insurance comes into effect.
What points need to be taken into account when signing a contract?
Voluntary health insurance is a kind of “constructor”, the quality of its assembly determines the timeliness and completeness of the services provided to the insured person. Here are the basic rules that will help you avoid problems when purchasing a VHI policy:
- A license to work in the insurance field must be confirmed by the insurance company before signing the contract. This will help to avoid problems when receiving services under the VHI policy;
- You cannot provide the insurer with false information about the health or incorrect data of the insured; this will void the contract and the services will not be provided legally;
- It is necessary to state in the documents that the resolution of all disputes between the policyholder (insured person) and the health care facility must be undertaken by the insurer;
- It is necessary to clearly define the actions of the policyholder and the insurer in the event of delay in payment of insurance premiums. Some insurance companies stop servicing VHI policies after 1 day of non-payment, which is not very convenient if the delay, for example, was due to the fault of the bank;
Publication
Voluntary health insurance (VHI) provides citizens with additional medical services that are provided in addition to the program established by compulsory health insurance. In order for employees of an organization to use such a service, the employer (policyholder) must enter into a special agreement with the medical insurance organization. This organization must have a license to engage in medical insurance, issued by the Ministry of Finance in accordance with the Rules for licensing the activities of insurance medical organizations (approved by Decree of the Government of the Russian Federation of March 29, 1994 No. 251).
We conclude an agreement
When concluding a VHI agreement, its standard form developed by the insurer is often used. An agreement must be reached between the parties (clause 2 of Article 942 of the Civil Code of the Russian Federation): firstly, on the insured person and the nature of the event in the event of which insurance is carried out (insured event); secondly, about the amount of the insured amount and the duration of the contract. If these points are not reflected in the contract, then it is considered not concluded.
Also, in order to optimize taxation, it is worthwhile to provide in the contract additional conditions regarding the possibility of clarifying the list of insured employees (if one of the previous employees quits or a new one arrives) and change the amount of insurance premiums.
A health insurance contract is considered concluded from the moment the insurance premium or first insurance premium is paid, unless otherwise established by the terms of the contract (Clause 1, Article 957 of the Civil Code of the Russian Federation, Article 4 of the Law of the Russian Federation of June 28, 1991 No. 1499-1 ).
An employer can enter into voluntary health insurance contracts for different periods: more or less than a year. Depending on the duration of the agreement, tax accounting of expenses under it has its own characteristics.
Attention
To optimize taxation, it is necessary to provide in the contract additional conditions for the possibility of clarifying the list of insured workers and changing the amount of insurance premiums.
Tax accounting
Income tax. In order to include insurance premiums as expenses, it is important to meet the following conditions:
VHI should be provided for in labor and (or) collective agreements (Article 255 of the Tax Code of the Russian Federation);
the contract with the insurance company must be concluded for a period of at least a year (clause 16 of Article 255 of the Tax Code of the Russian Federation);
the insurance company must have a license to carry out insurance activities (clause 16 of article 255 of the Tax Code of the Russian Federation);
VHI contributions cannot exceed 3 percent of the amount of labor costs. True, from January 1, 2009, their size will be increased to 6 percent (Federal Law of July 22, 2008 No. 158-FZ). The basis for calculating the maximum amount of such expenses is determined on an accrual basis in the tax period, starting from the moment the insurance contract comes into force (clause 3 of Article 318 of the Tax Code of the Russian Federation).
When accounting for expenses, keep the following points of contention in mind.
Situation 1
The company entered into a voluntary health insurance agreement for a period of more than a year. Later, new employees were hired into the organization. Based on this, the list of insured persons has been changed. The accountant has a question: can insurance payments for new employees be taken into account when calculating income tax?
The opinion of official bodies on this issue has changed several times. Thus, if during the validity period of a contract concluded for more than one year, the number of insured employees increases under an additional agreement, then the validity period of the agreement for new insured persons is less than a year. In this regard, expenses are not taken into account when calculating income tax. This is stated in the letter of the Ministry of Finance of Russia dated February 4, 2005 No. 03-03-01-04/1/51, letter of the Federal Tax Service of Russia for the city of Moscow dated June 22, 2007 No. 20-12/059654.
The latter states that if the number of insured persons increases due to newly hired employees, and the term of the additional insurance agreement is less than a year, then the insurance premiums do not reduce taxable income.
However, according to the latest position of the Ministry of Finance of Russia, (letters dated January 18, 2008 No. 03-03-06/1/13, dated January 18, 2008 No. 03-03-06/1/15) VHI contributions paid when changes in the composition of insured persons are still recognized as expenses, provided that the voluntary personal insurance contract provides for the possibility of changing the composition of insured persons and is valid for at least a year.
Situation 2
Can previously paid contributions be recognized as expenses if the VHI agreement is terminated before the end of its validity period? This may well happen in practice. One of the reasons for early termination of a contract with an insurance company is the deterioration of the financial condition of the company. And in this case, the paid insurance premiums under this agreement are recognized as expenses in proportion to the time of its validity (letter of the Ministry of Finance of Russia dated August 5, 2005 No. 03-03-04/1/150).
Situation 3
Are insurance premiums recognized as expenses under a VHI agreement if its subject is the prevention of diseases of policyholders?
The Tax Code does not clarify this controversial issue. There are no letters outlining the position of financial departments on this issue. However, arbitration practice is on the side of the policyholders.
In the decision of the Federal Antimonopoly Service of the West Siberian District dated March 20, 2006 in case No. F04-1519/2006 (20720-A67-15), the court recognized that insurance premiums under health insurance contracts for disease prevention were legally classified as “profitable” expenses.
Personal income tax. The amounts of insurance premiums paid by the company for employees under voluntary health insurance contracts are not included in the taxable income of employees. Accordingly, it is not subject to personal income tax (clause 3 of Article 213 of the Tax Code of the Russian Federation). In this case, the duration of the contract does not matter.
The procedure for assessing personal income tax is also not affected by the place of medical care - in Russia or abroad (letter of the Ministry of Finance of Russia dated July 5, 2007 No. 03-03-06/3/10).
UST. If the contract is concluded for a period of at least one year, then the unified social tax is not paid from insurance premiums for compulsory medical insurance (subclause 7, clause 1, article 238 of the Tax Code of the Russian Federation).
When concluding a health insurance contract for a period of less than one year, contributions under it do not reduce taxable profit (clause 6 of Article 270 of the Tax Code of the Russian Federation). However, in this case, the unified social tax is not accrued on them, since payments that are not classified as expenses that reduce the tax base for corporate income tax in the current reporting (tax) period are not recognized as an object of taxation under the unified social tax (clause 3 of article 236 of the Tax Code RF).
Accounting
In accounting, expenses for voluntary health insurance are classified as expenses for ordinary activities, regardless of the duration of the contract (clause 5 of PBU 10/99 “Expenses of an organization,” approved by order of the Ministry of Finance of Russia dated May 6, 1999 No. 33n).
As a rule, an organization transfers VHI contributions either in a lump sum at the time of concluding an agreement, or in installments during the term of the agreement. For example, monthly, quarterly or once every six months.
The calculated amounts of insurance payments are reflected on the credit of account 76 “Settlements with various debtors and creditors”, subaccount 76-1 “Calculations for property and personal insurance”, in correspondence with the accounts of costs or other sources of insurance payments. In turn, the transfer of amounts of insurance payments takes place in the debit of account 76-1 in correspondence with cash accounts (Instructions for the application of the Chart of Accounts for accounting financial and economic activities of organizations, approved by order of the Ministry of Finance of Russia dated October 31, 2000 No. 94n) .
Let's say the company transferred contributions in a lump sum. Then the amount of insurance premiums paid in advance is reflected in account 97 “Deferred expenses”. Costs are written off in the period to which they relate (clause 65 of the Regulations on accounting and financial reporting, approved by order of the Ministry of Finance of Russia dated July 29, 1998 No. 34n).
Example 1
The company entered into an agreement with the insurance company for a period of one year. According to the terms of the contract, she transfers an insurance premium in the amount of 150,000 rubles to the insurance company’s account. one-time payment. In accounting, these transactions will be reflected as follows:
Debit 76-1 Credit 51
– 150,000 rub. - insurance premium paid at a time;
Debit 97 Credit 76-1
– 150,000 rub. - the insurance premium paid to the insurer is charged to deferred expenses;
Debit 20 Credit 97
– 12,500 rub. - insurance premium, monthly included in the expenses of the main production (RUB 150,000: 12 months).
If the insurance premium is paid in equal installments throughout the entire term of the contract, it is not reflected in account 97 “Deferred expenses”, but is immediately taken into account in account 20 “Main production”.
You can’t do without PNO
VHI expenses are taken into account differently in tax and accounting, so permanent temporary differences arise.
Example 2
The organization entered into a VHI agreement with the insurance company for a year. According to the terms of the contract, the insurance premium is RUB 2,640,000. and is paid in a one-time payment. Labor costs in the fourth quarter amounted to: in October - 1,500,000 rubles, in November - 1,680,000 rubles. and in December - 1,700,000 rubles.
In accordance with paragraph 7 of PBU 18/02, a permanent tax liability is the amount of tax that leads to an increase (decrease) in income tax payments in the reporting period. For information on how to calculate PNO, see the table. According to the data in example 2, the permanent tax liability is reflected by the following entries:
Debit 99 Credit 68
– 42,000 rub. - a permanent tax liability is reflected in October;
Debit 99 Credit 68
– 40,704 rub. - a permanent tax liability is reflected in November;
Debit 99 Credit 68
– 40,560 rub. - a permanent tax liability is reflected in December;
Debit 84 Credit 99
– 123,264 rub. - the amount of permanent tax liability is attributed to the uncovered loss.
Table. Calculation of permanent tax liability
|
Month |
For accounting purposes |
For the purposes of determining tax |
Constant deviations |
Permanent tax liability |
|---|---|---|---|---|
|
October |
220,000 rub. |
45,000 rub. |
175,000 rub. |
42,000 rub. |
|
November |
220,000 rub. |
RUB 95,400 |
RUB 344,600 |
RUB 82,704 |
|
December |
220,000 rub. |
RUB 146,400 |
RUB 513,600 |
RUB 123,264 |
|
Total |
660,000 rub. |
RUB 146,400 |
RUB 513,600 |
RUB 123,264 |
Correct accounting of voluntary health insurance contracts will allow the company not only to increase its rating, but also to optimize the costs incurred for its implementation.
Izhevsk "____"________________ 200__
Hereinafter referred to as INSURER, having a license to carry out insurance activities for compulsory health insurance _________ dated ____________200__, represented by the Director ____________ ____________________________________________, acting on the basis of ___________ ________________________________________________________________, on the one hand, and _____________________________________________________________________________________ hereinafter referred to POLICY HOLDER, represented by __________________ _________________________________________________________________, acting on the basis of ___________________________________________________________________, on the other hand, have entered into this Agreement as follows:
1. Subject of the agreement and obligations of the parties
1.1. The insurer undertakes the obligation to organize and finance the provision of medical care of a certain volume and quality or other services to citizens included by the Insured in the lists of insured persons with the issuance of medical insurance policies of the established form to the insured.
1.2. The volume of medical care provided to insured persons in accordance with this Agreement is determined by the approved Territorial Program of Compulsory Medical Insurance of the Population of the Udmurt Republic. The specified program is an integral part of this agreement (Appendix No. 3).
1.3. The policyholder assumes the obligation to pay insurance premiums for compulsory medical insurance of working citizens as part of the Unified Social Tax, in the manner established by the current tax legislation of the Russian Federation.
1.4. The total number of insured persons at the time of conclusion of the contract is ____ people. The specified number is subject to clarification on a monthly basis by submitting to the Insurer registration notices of newly arrived and dismissed insured persons, as well as insured persons who have changed their names and addresses (Appendix No. 2).
1.5. Lists of insured persons in the form specified in Appendix No. 1 are provided by the Insured to the Insurer at the time of concluding the contract.
1.6. If the composition and number of insured persons changes, the Insured provides the Insurer with lists of those dismissed and hired by the 25th day of each month in the form of a registration notice (Appendix No. 2). Employees who started working during the validity period of this contract are considered insured from the moment they started working.
1.7. The Insurer undertakes to issue medical insurance policies for each insured person within no more than 10 calendar days from the date the lists are provided to the Insurer.
1.8. The insurer undertakes to monitor the quality and volume of medical services provided to insured persons by medical institutions in accordance with the current Territorial Compulsory Health Insurance Program.
1.9. In accordance with the current Regulations for the protection of the rights of the insured in the compulsory health insurance system on the territory of the Udmurt Republic, approved by the Decision of the Board of the Federal Compulsory Compulsory Medical Insurance Fund dated January 27, 2006, the Insurer undertakes to receive requests from the insured, respond to requests for the provision of services in health care facilities, and advise on all issues related to the receipt of services in health care facilities, consider and satisfy all justified complaints, claims and statements caused by inadequate, negligent quality of treatment or refusal of it by the health care facility, guaranteeing the full implementation of the patient’s rights in the provision of medical, pharmaceutical and service services.
1.10. The policyholder assumes the obligation to appoint a representative from among its employees to coordinate relationships regarding compulsory health insurance. The policyholder issues an order to appoint a responsible person, which is communicated to the Insurer and the insured persons, a copy of the order is transferred to the Insurer upon conclusion of the contract. The Insured's representative has the right to obtain medical insurance policies (or their duplicates) for the insured persons.
Health insurance is carried out in the form of an agreement concluded between the subjects of health insurance. Subjects of health insurance fulfill their obligations under the concluded contract in accordance with the legislation of the Russian Federation.
A health insurance contract is an agreement between the insured and a medical insurance organization, according to which the latter undertakes to organize and finance the provision of medical care to the insured population of a certain volume and quality or other services under compulsory health insurance and voluntary health insurance programs.
The health insurance contract must contain:
· names of the parties;
· duration of the contract;
· number of insured;
· size, terms and procedure for making insurance contributions;
· list of medical services corresponding to compulsory or voluntary health insurance programs;
· rights, obligations, responsibilities of the parties and other conditions that do not contradict the legislation of the Russian Federation.
The health insurance contract is considered concluded from the moment of payment of the first insurance premium, unless otherwise provided by the terms of the contract.
If the policyholder loses the rights of a legal entity during the period of validity of the compulsory health insurance contract as a result of the reorganization or liquidation of the enterprise, the rights and obligations under the specified contract pass to its legal successor.
During the period of validity of the voluntary medical insurance contract, if the court recognizes the insured as incompetent or limited in legal capacity, his rights and obligations are transferred to a guardian or trustee acting in the interests of the insured.
62. The essence and fundamentals of reinsurance
Reinsurance is a necessary condition for ensuring the financial stability of insurance operations and the normal activities of any insurance company. It is known that insurance is based on the theory of probability and the law of large numbers. According to this law, the combined action of a large number of random factors leads, under certain very general conditions, to a result that is almost independent of chance. Randomness appears as a pattern. In most cases, insurance companies are not able to create a perfectly balanced portfolio of risks, since the number of insurance objects is small or the portfolio contains large and dangerous risks that introduce elements of disproportion into the portfolio. In addition, practice shows that any insurance company, even with careful selection of risks when accepting them for insurance, cannot create a portfolio of insurance objects completely isolated from each other, since the insurance conditions usually cover various dangers to which the insured objects may be exposed simultaneously in the event of a catastrophe. : floods, hurricanes, earthquakes, devastating fires, etc. However, due to the fact that financial assets and even all assets of any insurer constitute only a small fraction of the total amount of its liability to policyholders for the entire portfolio of insured objects, these catastrophes (insured events) can not only significantly undermine the financial base of the insurance company, but also lead to it to complete bankruptcy.
To equalize the insured amounts of risks accepted for insurance and thereby balance the insurance portfolio, bring the potential liability for the total insured amount in accordance with the financial capabilities of the insurer and, therefore, to ensure the financial stability of insurance operations and their profitability, obtaining mutual participation in the risks accepted on insurance by other insurers, there is an institution of reinsurance.
Reinsurance is a system of economic relations in which the insurer, accepting risks for insurance, transfers part of the responsibility for them (taking into account its financial capabilities) on agreed terms to other insurers in order to create a balanced portfolio of insurance contracts, ensure financial stability and profitability of insurance operations.
Reinsurance achieves not only the protection of the insurance portfolio from the impact of a series of large insured events or even one catastrophic event, but also the fact that payment of insurance compensation for such cases does not place a heavy burden on one insurance company, but is carried out collectively by all participants.
An insurer that has accepted a risk for insurance and transferred it in whole or in part for reinsurance to another insurer is called reinsurer or assignor. The insurer that has accepted reinsurance risks is called reinsurer. Assistance in transferring risk to reinsurance is often provided by reinsurance broker. Having accepted a risk under reinsurance, the reinsurer can partially transfer it to a third insurer. This operation is usually called retrocession, and the reinsurer transferring the risk into retrocession - retro-assignee.
During the period of scientific and technological progress, there is a colossal concentration of material assets and, consequently, an increase in insurance amounts for a large number of insurance objects: the carrying capacity of sea vessels increases and, as a result of this, the cost of the vessels themselves and the cargo transported on them, giant factories are built, the cost increases significantly long-haul aircraft, etc. No insurance company can accept such large risks without having solid reinsurance coverage in excess of the amounts that it will hold on its liability.
In many cases, the insurance values of the risks to be insured are so large (or dangerous) that the capacity of individual markets is insufficient to provide insurance in full amounts.
Rebuilding is a special type of building. Its content consists in transferring part of the risk(s) in response to another specialized builder, i.e. rebuilder. An insurer that directly works with policyholders to assume their risks is called a “direct insurer,” or an insurer who transfers risks. The process of transferring part of the risks assumed to other insurance companies in order to create a portfolio that would ensure the stability and profitability of operations is called restructuring.
A reinsurer is an insurer who provides insurance services to a “direct insurer.”
The process of transferring risk is called risk assignment or insurance assignment. The person who transfers the risk is called the assignor, and the one who accepts this risk is called the assignee.
According to the form of mutual obligations of the reinsurer and reinsurance, reinsurance agreements are divided into: optional (optional); obligatory (mandatory); facultative-obligatory, or “open coverage” contracts, obligatory-facultative
Optional rebuild
The optional restructuring agreement concerns one risk in one transaction. This rebuilding allows the rebuilder to obtain an accurate understanding of the individual risk proposed to him before accepting obligations under the rebuilding agreement. A direct insurance offer for optional rebuilding must contain all relevant information about the risk that would allow the rebuilder to correctly evaluate it. After the rebuilder has studied the information associated with the risk, he informs the direct insurer what percentage or amount he will accept in the optional rebuild.
Typically, confirmation is made by telephone, fax, or by sending a signed copy of the proposal indicating the share to which the rebuilder agrees. The terms of the agreement concluded in this way are usually determined after some time. again in writing signed by both parties.
The rebuilder may refuse the proposed risk. It is enough for him to briefly outline the reasons for the refusal. He may also offer the direct insurer other conditions than those specified in the offer. If the rebuilder does not respond to the proposal, his silence cannot be considered as acceptance.
The optional restructuring agreement comes into force from the moment of receipt of acceptance, unless the parties agree otherwise. Significant changes in the terms of the direct contract during the period of its validity are obligatory for the reinsurer only if he has given his consent.
The optional restructuring agreement terminates automatically upon expiration of the established period, unless the parties agree otherwise. For a certain period before renewal, the direct builder, as a rule, offers the rebuilder to extend the validity of the agreement and informs him about changes in the terms of the direct agreement and about the statistics on the passage of the agreement. The rebuilder may refuse to prolong the contract.
Obligatory restructuring
Reinsurers receive a significant amount of reinsurance premium under obligatory reinsurance contracts.
Obligatory reinsurance establishes a closer connection between the parties than single reinsurance cessions. The most important principles of obligatory reinsurance were formed thanks to reinsurance with the determination of participation shares and excess reinsurance. Not all of them are valid in relation to disproportionate restructuring, which is carried out on an obligatory basis.
According to the obligatory restructuring agreement, the assignor undertakes to transfer to the restructuring all the risks described in detail, i.e. The rebuilder obligated to accept such risks is not defined. and does not assess risk on a case-by-case basis.
The assignor has ownership. the right to accept risks at its own discretion and determine the insurance premium. In addition, he must regulate losses as he sees fit in the general interests of insurance and reinsurance. The scope and extent of the obligation to follow the actions of the assignor corresponds to the right of the assignor to manage its business.
Reinsurance payments under the obligatory reinsurance agreement defined. as a percentage of the amount of payments received by the builder upon the mortgage. direct agreement.
The obligatory restructuring agreement is concluded for an indefinite period with the right of mutual termination. Such a contract is beneficial for the assignor, since all predetermined risks are automatically covered by the reinsurer.
Related information.
