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SOUTH AFRICAN QUALIFICATIONS AUTHORITY 
REGISTERED UNIT STANDARD THAT HAS PASSED THE END DATE: 

Explain reinsurance as it is applied in Short Term insurance 
SAQA US ID UNIT STANDARD TITLE
10362  Explain reinsurance as it is applied in Short Term insurance 
ORIGINATOR
SGB Financial Services 
PRIMARY OR DELEGATED QUALITY ASSURANCE FUNCTIONARY
-  
FIELD SUBFIELD
Field 03 - Business, Commerce and Management Studies Finance, Economics and Accounting 
ABET BAND UNIT STANDARD TYPE PRE-2009 NQF LEVEL NQF LEVEL CREDITS
Undefined  Regular  Level 4  NQF Level 04 
REGISTRATION STATUS REGISTRATION START DATE REGISTRATION END DATE SAQA DECISION NUMBER
Passed the End Date -
Status was "Registered" 
2002-06-12  2005-06-12  SAQA 0742/02 
LAST DATE FOR ENROLMENT LAST DATE FOR ACHIEVEMENT
2006-06-12   2009-06-12  

In all of the tables in this document, both the pre-2009 NQF Level and the NQF Level is shown. In the text (purpose statements, qualification rules, etc), any references to NQF Levels are to the pre-2009 levels unless specifically stated otherwise.  

This unit standard is replaced by: 
US ID Unit Standard Title Pre-2009 NQF Level NQF Level Credits Replacement Status
120136  Apply knowledge of Short Term Insurance to reinsurance  Level 4  NQF Level 04  Complete 

PURPOSE OF THE UNIT STANDARD 
This unit standard provides the fundamental background to reinsurance for learners who work in short term insurance or reinsurance.

The qualifying learner is capable of:
  • Demonstrating knowledge and understanding of the role of reinsurance.
  • Describing the reinsurance market.
  • Explaining the different types of reinsurance.
  • Assessing the need for reinsurance.
  • Explaining the most common methods of rating used by reinsurers.
  • Explaining the risk placing process. 

  • LEARNING ASSUMED TO BE IN PLACE AND RECOGNITION OF PRIOR LEARNING 
    There is open access to this unit standard. Learners should be competent in communication, mathematical literacy and financial literacy at Level 3. 

    UNIT STANDARD RANGE 
    The typical scope of this unit standard is:
    1. Types of reinsurance markets are local, overseas, registered/admitted and non-registered/non admitted.
    2. Avenues for placing reinsurance include direct, via reinsurance brokers and in house.
    3. Other types of reinsurance cover include pools, retrocession, reciprocal and pools contracts, stop loss, autofac, facultative obligatory treaties, line slips and binders.
    4. Factors that can influence a rate include types of commission, brokerage commission, profit share, no claims bonus, profit commission, flat and sliding scale commission and loss history. 

    Specific Outcomes and Assessment Criteria: 

    SPECIFIC OUTCOME 1 
    Demonstrate knowledge and understanding of the role of reinsurance. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The role of reinsurance in the insurance process is explained with reference to spreading the risk, capacity boosting, financial advantage, financial stability and protection against catastrophe. 

    ASSESSMENT CRITERION 2 
    2. The roles of insurers and reinsurers are compared and illustrated graphically. 

    ASSESSMENT CRITERION 3 
    3. The concept of a ceding company is explained with examples. 

    ASSESSMENT CRITERION 4 
    4. The concept of an accepting company is explained with examples. 

    ASSESSMENT CRITERION 5 
    5. The concept of retrocession is explained with examples. 

    ASSESSMENT CRITERION 6 
    6. The relationship between all parties in reinsurance is explained in a flow diagram. 

    SPECIFIC OUTCOME 2 
    Describe the reinsurance market. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The different types of reinsurance markets are explained with examples. 

    ASSESSMENT CRITERION 2 
    2. The different avenues for placing reinsurance are named with examples. 

    ASSESSMENT CRITERION 3 
    3. The placement market is investigated for three case studies. 

    ASSESSMENT CRITERION 4 
    4. The client's market is investigated for a specific reinsurer. 

    ASSESSMENT CRITERION 5 
    5. The concepts of admitted and non-admitted markets are explained with examples and an indication is given of the implications of using a non-admitted market. 

    SPECIFIC OUTCOME 3 
    Explain the different types of reinsurance. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The difference between treaty and facultative reinsurance is explained in terms of their use. 

    ASSESSMENT CRITERION 2 
    2. The concepts of proportional and non-proportional reinsurance are described with examples. 

    ASSESSMENT CRITERION 3 
    3. At least five other forms of reinsurance cover are investigated and an indication is given of why each type is necessary. 

    SPECIFIC OUTCOME 4 
    Assess the need for reinsurance. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. Factors that are considered in analysing reinsurance on a risk are listed in a table and an indication is given as to why each is important. 

    ASSESSMENT CRITERION 2 
    2. Five examples of risk are analysed and a decision is made and supported on the type of reinsurance required to cover the reinsurance risk. 

    SPECIFIC OUTCOME 5 
    Explain the most common methods of rating used by reinsurers. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. The concept of burning cost rating is explained with examples. 

    ASSESSMENT CRITERION 2 
    2. The concept of aggregate rating is explained with examples. 

    ASSESSMENT CRITERION 3 
    3. Factors that can influence a rate are explained for three case studies. 

    SPECIFIC OUTCOME 6 
    Explain the risk placing process. 

    ASSESSMENT CRITERIA
     

    ASSESSMENT CRITERION 1 
    1. A reinsurance slip is drafted in response to a facultative risk placed with the reinsurer for facultative cover on an excess of loss basis. 

    ASSESSMENT CRITERION 2 
    2. A reinsurance slip is drafted in response to a treaty risk placed with the reinsurer for treaty on proportional risk and an explanation is given of the relationship between a treaty slip and a treaty wording. 

    ASSESSMENT CRITERION 3 
    3. A bordereaux is raised for a facultative risk. 

    ASSESSMENT CRITERION 4 
    4. The process followed by a reinsurance organisation is illustrated in a flow diagram. 


    UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS 
    This Unit Standard will be internally assessed by the provider and moderated by a moderator registered by INSQA. The mechanisms and requirements for moderation are contained in the document obtainable from INSQA, INSQA framework for assessment and moderation. 

    UNIT STANDARD ESSENTIAL EMBEDDED KNOWLEDGE 
    N/A 

    UNIT STANDARD DEVELOPMENTAL OUTCOME 
    N/A 

    UNIT STANDARD LINKAGES 
    N/A 


    Critical Cross-field Outcomes (CCFO): 

    UNIT STANDARD CCFO IDENTIFYING 
    The learner can identify and solve problems in which responses show that responsible decisions have been made in making and supporting a decision on the type of reinsurance required to cover a risk. 

    UNIT STANDARD CCFO WORKING 
    The learner can work effectively with others as a member of a group in placing reinsurance. 

    UNIT STANDARD CCFO COLLECTING 
    The learner can collect, organise and evaluate information investigating the placement market and different forms of reinsurance. 

    UNIT STANDARD CCFO COMMUNICATING 
    The learner can communicate effectively using visual, mathematical and language skills in oral and written presentation when drafting a slip, explaining the concepts in the unit standard and illustrating the process followed in a reinsurance organisation and the way in which insurers and reinsure handle risk. 

    UNIT STANDARD CCFO DEMONSTRATING 
    The learner can demonstrate an understanding of the world as a set of related systems by explaining the role of reinsurance in spreading the risk. 

    UNIT STANDARD ASSESSOR CRITERIA 
    N/A 

    UNIT STANDARD NOTES 
    This unit standard has been replaced by unit standard 120136, which is ' Apply knowledge of Short Term Insurance to reinsurance ', Level 4, 5 credits. 

    QUALIFICATIONS UTILISING THIS UNIT STANDARD: 
      ID QUALIFICATION TITLE PRE-2009 NQF LEVEL NQF LEVEL STATUS END DATE PRIMARY OR DELEGATED QA FUNCTIONARY
    Core  21796   National Certificate: Short Term Insurance  Level 4  NQF Level 04  Passed the End Date -
    Status was "Registered" 
    2005-06-12  Was INSETA until Last Date for Achievement 
    Elective  24396   National Certificate: Risk Management  Level 4  NQF Level 04  Passed the End Date -
    Status was "Registered" 
    2006-10-08  Was INSETA until Last Date for Achievement 


    PROVIDERS CURRENTLY ACCREDITED TO OFFER THIS UNIT STANDARD: 
    This information shows the current accreditations (i.e. those not past their accreditation end dates), and is the most complete record available to SAQA as of today. Some Primary or Delegated Quality Assurance Functionaries have a lag in their recording systems for provider accreditation, in turn leading to a lag in notifying SAQA of all the providers that they have accredited to offer qualifications and unit standards, as well as any extensions to accreditation end dates. The relevant Primary or Delegated Quality Assurance Functionary should be notified if a record appears to be missing from here.
     
    NONE 



    All qualifications and part qualifications registered on the National Qualifications Framework are public property. Thus the only payment that can be made for them is for service and reproduction. It is illegal to sell this material for profit. If the material is reproduced or quoted, the South African Qualifications Authority (SAQA) should be acknowledged as the source.