In insurance jargon, coinsurance is a term that remains somewhat vague. This technique allows several insurance companies to guarantee the same risk or set of hazards via a single contract.
The actual definition of coinsurance
The term coinsurance designates the operation by which two or more insurers come together to bear simultaneously, in an ordinary contract, the same risk. Insurers use coinsurance, especially when the risk is high and the cost of the goods to be guaranteed is relatively high.
In less technical terms, coinsurance is a process by which insurers share the risk that policyholders represent. In this way, in the event of claim compensation, the insurers do not risk having financial difficulties since many of them simultaneously bear the expenses. Despite the involvement of several insurance companies, only one insurer is delegated to establish and manage claims on behalf of all the others. This is the leader. The latter is vested with a representative general mandate.
How does coinsurance work?
Coinsurance is ultimately an operation carried out masterfully by the leading insurer. Being the agent of the other co-signatory insurers, he is responsible for collecting the entire premium to pay them their share separately. It is also the leading insurer accountable for managing the compensation from the insured and for initiating the necessary legal proceedings in the event of non-payment.
The role of the leading insurer extends to claims management. He must therefore pay the full indemnity due to the insured. To do this, it does not hesitate to exercise recourse against the co-insurers up to their share.
How to calculate the life insurance premium?
That is a population of 1,000 insured in the event of death for capital of €1,000. If two deaths occur during the year, the insurer will have to pay €2,000. The insurer must therefore request a premium of €2 from each subscriber. Any insured person wishing to be guaranteed €1,000 will owe him €2 for €2,000, he will owe him €4, etc.
How to calculate the pure premium?
Thus, the premium is calculated as follows:
- The Pure Prime = ( p + a*p ) * C = p * C ( 1 + a )
- Risk Premium = Pure Premium + Loading for risk management fees.
- Total Premium = Gross Premium + Taxes received.
- 20,000.00 * 0.00650 = €130
How do you determine the insurance premium?
The insurance premium corresponds to the addition of the various monthly payments in the case of a contract with a recurring revenue each month. For certain types of insurance, the contribution is annual and therefore corresponds to the premium.
Is it possible to have two home insurance?
Good to know: It is possible to simultaneously have two home insurance contracts. You have to tell your insurer how long you want to be covered for both accommodations. It should also be noted that some insurers also accept these procedures by telephone.
How to make the proportional rule?
The insurer must indicate an amount of insurance equivalent to the value of the goods and multiply by the percentage of the proportional rule (80%, 90%, or 100%), which applies to the contract.
Who develops the IPID?
What does IPID mean? The IPID is the abbreviation of Insurance Product Information Document. It is a document that must be given to the customer before the conclusion of a contract. The European Commission has introduced a standard document that should be used when developing the IPID.
What documents must the insurer provide as part of the pre-contractual information obligation?
For its part, the insurer must provide pre-contractual information documents: an information sheet on prices and guarantees before the conclusion of the contract and a copy of the draft contract and its annexes or a notice of information (article L. 112-2 of the Insurance Code).
Which standardized information document must be given to the subscriber of non-life insurance products?
European regulation 2017/1469 is binding on insurance organizations. Therefore, the model provided must be applied by all designers of insurance products, always to enable the customer to understand and compare information on the product.
