Article by Ed Stanley and Mark Everest
More and more companies and syndicates are going into run-off. It is tempting when conducting a run-off to regard time as money and think that the sooner inwards claims are resolved, the better. Commutations are often seen as the best way forward as they remove the lost time in waiting for potential liabilities to crystallise.
Under a commutation, the reinsurer pays an agreed amount to his reinsured and in return, is released from future ongoing liabilities. The payment will typically comprise a mixture of the following:
1. Unpaid Claims
amounts notified by the reinsured as being due and payable under the reinsurance policy but which the reinsurer has not paid.
