With respect to solvency, the issue of recoverable reinsurance, the reinsurer`s payments is due. In the mid-1980s, some reinsurance companies that entered reinsurance during the period of high interest rates in the early 1980s left the market due to bankruptcies or other problems. (When interest rates are high, some insurance and reinsurance companies try to increase their market share in order to have more premiums for investments. People who do not pay attention to the risk-taking of the business they will depreciate may ultimately pay unduly for coverage and, therefore, go bankrupt.) As a result, some insurers that reassurance with these businesses that no longer existed were unable to recover the funds they had on their reinsurance contracts. The CCRIF acts as a mutual that allows Member States to consolidate their risks into a diversified portfolio and acquire reinsurance products or other risk transfer products on international financial markets, which represents savings of up to 50% compared to what each country would cost if it were an individual civil protection purchase. Since a hurricane or earthquake affects only one or three Caribbean countries on average over a one-year period, each country contributes less to the reserve than would be necessary if each country has its own reserves. In the case of optional reinsurance, the reinsurer must cushion the individual “risk” such as a hospital, as a primary company would do when it reviews and records all aspects of the operation and the hospital shutdown for safety. In addition, the reinsurer would consider the hiring and management of the non-reinsurer insurer to protect reinsurance. This type of reinsurance is called optional because the reinsurer has the power or “ability” to accept or refuse in whole or in part any policy proposed to him, as opposed to the contractual reinsurance according to which he must accept all applicable policies as soon as the contract is signed. All claims on basic policies that took place during the duration of the reinsurance contract are covered even if they occur after the expiry date of the reinsurance contract.
The rights resulting from basic policies pulverized outside the duration of the reinsurance contract are not covered, even if they occur during the duration of the reinsurance contract. Known as the Federal Reinsurance Backstop, the Terrorism Insurance Act of 2002 was passed in November 2002 and extended from 2005 to December 2007 and extended until December 2014. The law does not apply to reinsurers, see the terrorism insurance report. The willingness of an insurance company to offer civil protection is often determined by the availability of reinsurance. When disaster bonds were first issued after Hurricane Andrew, they should be accepted across the sector as an alternative to the then-rare traditional reinsurer, but still constitute a small, albeit growing, part of the global disaster reinsurance market.