I have a question. The equation for the provision for reinsurance for an unauthorized reinsurer is:
Minimum[(A) and [(A) - (B)]] + Minimum [(B) and 20% * (C)] + Minimum [(B) and 20% * (D)]
Where
A = Total reinsurance recoverable on all items
B = Allowable offsets
C = Recoverable on paid loss and LAE greater than 90 days overdue, excluding amounts in dispute
Okay so there was a question saying that there is no way to avoid the penalty for overdue reinsurance in this case. However, if the allowable offset is $0 wouldn't it be less than 20% * (C) and thus be a way to avoid the penalty?
Minimum[(A) and [(A) - (B)]] + Minimum [(B) and 20% * (C)] + Minimum [(B) and 20% * (D)]
Where
A = Total reinsurance recoverable on all items
B = Allowable offsets
C = Recoverable on paid loss and LAE greater than 90 days overdue, excluding amounts in dispute
Okay so there was a question saying that there is no way to avoid the penalty for overdue reinsurance in this case. However, if the allowable offset is $0 wouldn't it be less than 20% * (C) and thus be a way to avoid the penalty?
Allowable offset
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