Introduction
A provisional notice of cancellation is one of the ways by which a participant of a reinsurance treaty may inform the remaining participants about their intention to exit the treaty. This kind of notice is made use of only for termination of a continuous reinsurance contract, which is generally due for a renewal on a yearly basis.
Understanding Provisional Notice of Cancellation (PNOC)
Provisional notice of cancellation will enable the participants of a relentless reinsurance agreement to assess the insurance contract and decide if they should be continuing with it or not. Majority of the reinsurance contracts have an arrangement for this assessment on a yearly basis.
All the parties involved in reinsurance treaties are allowed provisional issue notice of cancellation to each other. On issuing a provisional notice of cancellation will provide a ninety-day window in which they are allowed to legally and formally cancel their contract.
Reinsurance treaties will let insurance companies diversify their risk over a vast pool of reinsurers to alleviate financial disasters that may arise on the back of unprecedented developments. When an insurer underwrites an insurance policy to an individual or organisation, then it is going to accept a specified amount of degree in exchange for a payment of premium by the insured.
Procedure
The guidelines for the notice of the cancellation process can be found written under the clause of the reinsurance contract. It would have mentioned the date by which the yearly renewal of the contract is due, and the date by which the parties involved should provide the provisional notice of cancellation of the reinsurance contract. It also contains information as to on what stipulations the insured and the insurer entered the reinsurance agreement upon.
