What is reinsurance

Phabbyfundz

Valued Contributor
Reinsurance is insurance for insurance companies. It is a way of transferring or ceding some of the financial risks insurance company assume in insuring cars, home and businesses to another insurance company, the reinsurer.
Reinsurance, a highly complex global business, accounted for about 9 percent of the U S property or casualty insurance industry premiums in 2008, according to the reinsurance association of America.
The reinsurance business is evolving. Traditionally, reinsurance transactions were between two insurance entities; the primary insurer that sold the original insurance policy and the reinsurer. Most still are the primary insurers and the reinsurer can share both the premiums and losses or reinsurer may assume the primary company's losses above a certain dollar limit in return for a fee. However risks of various kinds particularly if natural disasters are now being sold by insurers and reinsurer to institutional investors in the form of catastrophe bond and other alternative risks spreading mechanisms.
 

Mandy96

Valued Contributor
If I am not mistaking, this simply means that the insurance companies also do get insured in their own ways. Let’s get one thing straight. Buying a policy from a policyholder and then it happens that they are facing a financial problem. Does this mean that the insurer is also under a plan
 
Comment

btaliat

VIP Contributor
This can be explained in two ways based on the level of my comprehension. It may mean that insurance as well as a way of making sure they also insure their company or it may mean any insurance company can occupy the other insurance company facing financial challenges at any point in time.
 
Comment

Wisdom01

VIP Contributor
I haven't seen such kind of insurance occur ,but if the person is transferring the risks to voth insurance company , would the premium payable change or it would be same thing and the risk that will be beared too , I really do want to know more about reinsurance too
 
Comment

Nite

Verified member
In Reinsurance, insurers transfer their portions of financial risk to other insurance companies. Just like we take insurance, this is also a kind of insurance for insurance companies. Reinsurance helps an insurance company by making sure it is not exposed to any large risks at any given point of time.
 
Comment

Chibson

VIP Contributor
Good information here. Sometimes the insurance companies also need insurance for safety and for the protection and maximizing of profit. you must understand that insurance companies are businesses and in that case they need protection for their business which means that they will definitely go into reinsurance.
I think many insurance companies are involved in this.
 
Comment

Mataracy

VIP Contributor
Reinsurance can be describe as a way in which an insurance company seek help from another company that had more capacity may be in terms of resource or power to accept insuring the property from the other insurance company.
Some times this do occur when the risk involved in the risk taken is beyond the insurance company.
 
Comment
Top