Cancellation in Reinsurance

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Cancellation in Reinsurance
It is a legal notice to end participation by an insurance or reinsurance in a contract before it is due to expire. Participants in a reinsurance treaty can notify the other participants of their intention to withdraw from the treaty. Oftentimes, reinsurance contracts will allow each party to issue a Provisional Notice of Cancellation (PNOC per year and agree to grant 90 days in which to reach an agreement. Failure to reach an agreement would then result in the termination of the reinsurance contract. A contract may have a cancellation clause which permits the contracting parties to cancel it before it is due to expire, and may also stipulate the conditions for cancellation which can be performed by sending a cancellation notice. The clause may provide for a return of premium in respect of the unused portion of the contract. The cancellation of the contract on the continuous contracts is supported by this notice of cancellation. The accounting perspective when cancelling a reinsurance contract is also a very important topic. The cancellation of a reinsurance contract in accounting can take place in 2 ways: -First on a run-off basis, which means that the liability of the reinsurer under policies, which became effective under the treaty prior to the cancellation date, shall continue until the expiration date of each policy. -The Second way is cut-off basis, which means that the liability of the reinsurer under policies, which became effective under the treaty prior to the cancellation date, shall not continue after said cancellation date. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful

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