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Insurance Corporation of Hannover


Crop Reinsurance Program


Background

The Insurance Corporation of Hannover ("ICH" or "the Company") is a specialist reinsurance company incorporated in Illinois and licensed/admitted to write reinsurance business in 47 of the United States. ICH is a major provider of proportional reinsurance capacity to primary US crop insurers and is probably the largest provider of crop reinsurance in the country. ICH anticipated that the demand for proportional reinsurance will be flat in the coming years and that there will be an increase in demand for aggregate excess-of-loss capacity which, even at current demand levels, exceeds traditional reinsurance market capacity.

Client Need

ICH was seeking to provide direct insurers with aggregate excess-of-loss reinsurance to cover their net retained crop insurance risk (the "Subject Business"). The Company was also seeking to manage its growth in this activity by simultaneously developing retrocessional capacity for itself, but lacked a framework to quantify and price the risk.

The Service

To facilitate the development of the new product and the raising of desired capacity under the Program, ICH retained The RISConsulting Group LLC ("RISC") to assist it in designing the Program and to build a scientific model to evaluate, measure and price the risk in a given crop insurance or reinsurance portfolio.

The Result

Since August of 1999, ICH has offered excess-of-loss reinsurance to direct crop insurers and it continues to use the Model built by RISC to underwrite new business through its specialty crop reinsurance product.



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