Choise of best reinsurance coverage for a cypriot inscurance company

Abstract

Insurance market is one of the largest markets in the world. Almost every person in this planet purchases a kind of insurance product, eitherthis has to do with Life or non-Life aspects. The basic intuition of Insurance is risk transfer. A person wishes to limit the danger of bearing the consequences of a risk happening. In this light, he will purchase an insurance contract, so that when the risk happens he will have a partner during the pay off. Now imagine that thousands of people buy insurance contracts of the same kind. The above then forms a portfolio for the Insurance company, for example Fire portfolio, covering all people that bought insurance to protect their houses from fire. Then the Insurance company can act like an individual who wishes to insure this portfolio as a whole, to limit its exposure to danger. This is then called Reinsurance. Choosing the best Reinsurance contract is crucial to the Insurance company, as we can understand the magnitude of the risk insured. This Thesis deals with combined Fire and Earthquake portfolios of a Cypriot Insurance company. Choosing the best Reinsurance coverage amongst many options is the target.