Reflecting Reinsurance Costs in Rate Indications for Homeowners Insurance

This presents the rationale for reflecting reinsurance costs explicitly in Homeowners indications. Catastrophe reinsurance has become relatively expensive and it should be reflected in rates to ensure rate adequacy. The basic concepts to adjust historical losses for the benefits of reinsurance and to reflect the reinsurance premium will be addressed. One approach for dealing with the concepts will be illustrated with some discussion of possible variations.