Pooling systems

There are two pooling systems available

  • Stop-loss
    Each year any negative balance in the multinational profit & loss account is absorbed by the participating insurance companies.
  • Loss carryforward
    Any negative balance in the multinational profit & loss account is transferred to the next year’s account.

Reinsurance premium
To prevent a deficit, the client pays a reinsurance premium. The reinsurance premium is higher on the Stop Loss system than on the Loss Carry Forward system, as the Loss Carry Forward system allows the insurer the option to ”catch up” on a possible deficit from previous years. The higher the volume, the lower the reinsurance premium.

Risk premium
A surplus is created if the risk premium exceeds the claims. The balance of the positive results for a company's subsidiaries is payable to the parent company as a multinational dividend. The parent company determines the distribution of the local dividend.

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This is how a pooling agreement is established

  • A plan of action is prepared for the subsidiaries to consider the possibilities for entering a pooling agreement.
  • The local insurance company (in the pooling network) prepares a quotation for the insurance benefits.
  • Subsidiary and parent company consider the quotation and make a decision.


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