8DSetting reinsurance premiums

8D Setting reinsurance premiums

When setting premiums that reinsureds are to pay under cyclone reinsurance contracts, the Corporation is to seek: (a) to ensure that, over the longer term, premiums paid under such contracts are sufficient to cover or offset: (i) the amounts paid in meeting the Corporation’s liabilities under such contracts (including payments by the Commonwealth under section 35A in respect of such liabilities); and (ii) all other amounts applied by the Corporation as mentioned in subsection 34(1), in so far as those amounts may reasonably be regarded as connected with the cyclone reinsurance scheme; and (b) in so far as those premiums are for reinsuring liability under pool insurance contracts that involve medium to high levels of exposure to eligible cyclone losses—to keep the premiums as low as possible while maintaining incentives to reduce and mitigate the risk of eligible cyclone losses; and (c) in so far as those premiums are for reinsuring liability under pool insurance contracts that involve lower levels of exposure to eligible cyclone losses—to keep those premiums at levels comparable to what would be charged by other reinsurers.