Which reinsurance premiums reduce gross premiums in calculating unearned premium income?
79. All reinsurance premiums that are incurred by a general insurer other than : (a) those to which subsection 148(1) applies; and (b) treaty non-proportional reinsurance premiums need to be offset against gross premiums in the manner explained at paragraphs 12 to 19. Explanations: reinsurance premiums incurred by a general insurer General background 80. An insurance market is effective only if liability arising from the risks undertaken by insurers are spread as widely as possible. Spreading of liability cushions insurers against the vagaries of unusually large claims, natural disasters and other catastrophes. It also enables the fixing of premiums at a stable rate. The technique of spreading is known as ‘reinsurance’ as it reduces an insurer’s exposure to risk. 81. In effect, reinsurers set the ultimate rates of premiums and insurance conditions for a particular market. This occurs because an insurer will be able to offer insurance to the market only if adequate cover by way of reins
