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Insurance risk transfer and categorization of reinsurance contracts


  • Gurenko, Eugene

    () (World Bank)

  • Itigin, Alexander

    () (World Bank)

  • Wiechert, Renate

    (World Bank)


Despite the existence of numerous quantitative approaches to the categorization of financial reinsurance contracts, insurance regulators may often find the practical implementation of the task to be technically challenging. This paper develops a simple, affordable and robust regulatory method that can help insurance regulators categorize whether financial reinsurance contracts classify as reinsurance. By reviewing real examples of different categorization methods, this paper explains how the proposed method, the Standardized Expected Reinsurer’s Deficit (SERD), standardizes such categorization. It also summarizes the existing pertinent literature on the subject with the view to helping insurance regulators to first apply some simple indicators to flag the main issues with financial reinsurance contracts that may need further reviews.

Suggested Citation

  • Gurenko, Eugene & Itigin, Alexander & Wiechert, Renate, 2013. "Insurance risk transfer and categorization of reinsurance contracts," Journal of Financial Perspectives, EY Global FS Institute, vol. 1(3), pages 121-141.
  • Handle: RePEc:ris:jofipe:0031

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    References listed on IDEAS

    1. Wang, Shaun S., 2002. "A Universal Framework for Pricing Financial and Insurance Risks," ASTIN Bulletin: The Journal of the International Actuarial Association, Cambridge University Press, vol. 32(02), pages 213-234, November.
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    More about this item


    reinsurance; financial reinsurance contracts; regulation; expected reinsurance deficit;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies


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