What do reinsurance means?
Issue: Reinsurance, often referred to as insurance for insurance companies, is a contract between a reinsurer and an insurer. In this contract, the insurance company—the cedent—transfers risk to the reinsurance company, and the latter assumes all or part of one or more insurance policies issued by the cedent.
What is an example of reinsurance?
For example, an insurance company might insure commercial property risks with policy limits up to $10 million, and then buy per risk reinsurance of $5 million in excess of $5 million. In this case a loss of $6 million on that policy will result in the recovery of $1 million from the reinsurer.
What is difference between insurance and reinsurance?
Reinsurance is insurance for insurance companies. It's a way of transferring some of the financial risk insurance companies assume in insuring cars, homes and businesses to another insurance company, the reinsurer.
What is the difference between reinsurer and reinsurance?
A reinsurer is a company that provides financial protection to insurance companies, handling risks too large for them to handle alone. Reinsurance is the practice of one or more insurers assuming another insurance company's risk portfolio in an effort to balance the insurance market.
What is a reinsurance company?
Insurance company that places reinsurance business of the original risk with a reinsuring company; or the original insurer; the insurer who obtains a guarantee (on fire policy). 4. Cession This is the amount reinsured with the reinsurance i.e., ceded to the reinsurer. 5. Reinsurance policy
What is a reinsurance contract of indemnity?
A reinsurance contract is a contract of indemnity, meaning that it becomes effective only when the insurance company has made a payment to the original policyholder. Reinsurance provides a way for the insurance company to protect itself from financial disaster and ruin by passing on the risk to other companies.