These are the various types of reinsurances, when an insurance company insures itself it is called as reinsurance, where by it shares the risk of loss with another company. Insurance companies need reinsurance, when they face the danger of having to pay a multitude of claims at the same time and hence have no option but to face bankruptcy, where as if they have reinsured they are protected to a certain extent. Event like the September 11 attack of the twin towers have caused the closure of several small reinsurance agencies, hence the significance of reinsurance for an insurance company is tremendous.

Types of Reinsurance:

There are two kinds of reinsurances, treaty reinsurance and facultative reinsurance.
Treaty Reinsurance: This kind of reinsurance requires that the reinsurer will assume part or all of a ceding company’s responsibility for certain sections or classes of business in accordance with the terms of the policy. It is an obligatory contract as the ceding company has to cede the business and the reinsurer is obliged to assume the business as per the treaty. It is the preferred type of reinsurance when groups of homogenous risks are considered.

Facultative Reinsurance: This kind of reinsurance is used while considering a particular underlying risk of an individual contract. It is the reinsurance of all or part of a single policy after the terms and conditions have been negotiated. It reduces the ceding company’s exposure to risk from an individual policy. It is non- obligatory.

In another way, reinsurance is classified as proportional and non-proportional reinsurances.
Proportional Reinsurances: The two companies share the premium as well as risk. The reinsurer usually pays a ceding commission.

Pro-Rata Reinsurance: It is a classification based on the way the two companies share the risk. The cedent and the reinsurer share a pre decided percentage of the premium and losses. It is used widely as it provides surplus protection. There are two types of pro-rata reinsurance, quota share and surplus share.

Quota Share Pro-Rata Reinsurance: The primary insurer cedes a fixed percentage of premiums and loses for every risk accepted.

Surplus Share Pro-Rata Reinsurance: It is different in that not every risk is ceded but only those that exceed certain predetermined amounts.

Non-Proportional Reinsurance: As the name suggests it is not proportional and the reinsurer only responds if the loss suffered by the insurer exceeds a certain amount.

Excess of Loss: It covers a single risk or a certain type of business. Catastrophe reinsurance is a type of excess of loss reinsurance. It provides the captive with a great deal of flexibility.
Stop Loss Reinsurance: It covers the whole account and is also known as excessive loss ratio reinsurance.

Factoring is an effective strategy that allows your business to borrow against its invoices or accounts receivable for a small fee. This will allow you to gain access to your hard earned dollars quickly so that you can reinvest them into your business or to pay outstanding invoices. Waiting for a vendor or client payment can be frustrating, especially if it is over a month or more away. Factoring offers your business an affordable financing solution.

Various agencies provide all these types of factoring. Usually their turnaround time is 24 hours. They provide exclusive online and paperless factoring solutions to the small and medium sized businesses. These agencies either provide stated rates for factoring of invoices of a particular amount or they offer a free invoice-factoring quote. Thereafter these agencies approach the factoring companies that purchase the creditworthy accounts receivable at a small discount and convert the invoices in to cash.

Moreover the factors handle the collection in professional manner thus reduces the collection costs. They also help in processing of invoices by generating invoices online. This further means increased paperless work. As a result the turnaround time is much shorter than any other means.

Invoice factoring is also known as accounts receivable financing. This practice helps in solving the immediate cash flow problems for small businesses with immediate infusion of money. They also provide a credit facility to small business owners with complete flexibility. This also provides the working capital to the small or medium business owners. This factoring helps in generating working capital without the need of constant renegotiations. Since there is a considerable increase in the working capital it leads to more sales and expansion of business.

As a result of invoice factoring, it not only reduces accounting costs but also helps business owners and manufacturers in increased productivity. This practice if factoring the invoices keeps the businessmen from other time consuming jobs like collection, administration, book-keeping, looking up additional capital or warding off creditors.

Finally the best part of factoring is that the business ownership remains unchanged as in case of loan, etc. Since there is no loss of business equity, the ownership percentages remain unchanged.

If you are looking for a company that can help you with factoring or that can provide you with more information on factoring please visit http://www.touchfinancial.co.uk/factoring. The aim at Touch Financial Factoring is simple, to save you time and money by putting you in touch with the right lender. No-obligation quotes are available through our quick and easy to use online quote form. They also have a dedicated team of factoring experts on hand to take your call should you need any more information or advice. They’ve helped thousands of business owners find the right finance through over 60 years combined experience in the commercial finance arena, how can they help you?