reinsuring
Insuring the insurer
Reinsuring is the practice of one insurance company transferring part of its risk to another insurer.
When a company writes policies that exceed its comfortable exposure, it reinsures the excess with a reinsurer: The firm is reinsuring a portion of its hurricane coverage.
This spreads catastrophic risk across multiple parties.
Formally surrendering territory or rights
- retrocessionReturn of ceded territory
- surplusAmount exceeding requirement
- treatyBinding pact between nations
- facultativeCapable but not obligated
layering · stop-loss · proportional · reinstatement · commutation · slip · placement · binding
Extent of inclusion
Payments for insurance coverage
- claimsStatements of truth
- reservesResources held back
- capitalizationUsing big letters properly
- solvencyCapacity to pay debts
Expanding into varied areas
- spreadingExtending over space
- exposureState of being unprotected
- aggregationCombined collection of items
- accumulationCollected mass over time
correlation · modeling · frequency · severity
ceding
Formally surrendering territory or rights
- retrocessionReturn of ceded territory
- surplusAmount exceeding requirement
- treatyBinding pact between nations
facultative · layering · stop-loss · proportional · reinstatement · commutation · slip · placement · binding · renewal
coverage
Extent of inclusion
premiums
Payments for insurance coverage
- claimsStatements of truth
- reservesResources held back
- capitalizationUsing big letters properly
solvency · liquidity · collateral · creditworthiness · ratings
diversification
Expanding into varied areas
- spreadingExtending over space
- exposureState of being unprotected
- aggregationCombined collection of items
accumulation · correlation · modeling · frequency · severity