Reinsurance
Definition of "Reinsurance"
Form of insurance that insurance companies buy for their own protection, "a sharing of insurance." An insurer (the reinsured) reduces its possible maximum loss on either an individual risk (facultative reinsurance) or a large number of risks (automatic REINSURANCE) by giving (ceding) a portion of its liability to another insurance company (the reinsurer).
Reinsurance enables an insurance company to expand its capacity; stabilize its underwriting results; finance its expanding volume; secure catastrophe protection against shock losses; withdraw from a class or line of business, or a geographical area, within a relatively short time period; and share large risks with other companies.
Popular Insurance Terms
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Exchange of a new policy for one already in force. ...
Court-appointed or commissioner of insurance-appointed custodian to manage the affairs of an insurance company whose management is deemed unable to manage that company in a proper fashion. ...
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Same as term Basic Limit of Liability: required minimum amounts of coverage that an insurance company will underwrite. For example, for auto liability coverage the minimum that many ...
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