Word of the Day #WOTD

Reinsurance

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. Reinsurance contracts may be negotiated with a reinsurer or arranged through a third party; i.e., a reinsurance broker or intermediary. Reinsurers may also buy reinsurance protection, which is called “retrocession.” This is done to reduce any further spread risk and the impact of catastrophic loss events.

Related

Underwriting, Insurance Policy, Financing, Catastrophe Protection, Retrocession, Arbitrage, Capital Management, Risk Transfer, Insurance Company, Homeowner Insurance

Source, NAIC: https://content.naic.org/cipr-topics/reinsurance