What happens to a life assurance application when an insurer breaches the reinsurance limit?

When an insurer breaches the reinsurance limit, the acceptance of a life assurance application may be delayed. This occurs because insurers often rely on reinsurance to manage their risk exposure. If the primary insurer has exceeded its reinsurance limit on risk coverage, it may need to prioritize which applications to accept based on their current capacity and risk appetite.

The need for reevaluation of the application, in accordance with the insurer's underwriting guidelines and risk management strategies, can lead to a delay in the approval process. This might involve additional review or even a requirement to seek additional reinsurance terms to manage the risk before approving the application. Therefore, the correct understanding is that any application under such circumstances could face a postponement while these factors are addressed.