Reinsurance
Reinsuranceisinsurancethat an insurancecompanypurchases from another insurance company to protect itself (at least in part) from therisksthat are too big for itself, like a majordisaster.[1]With reinsurance, the company passes on ( "cedes" ) some part of its own insurance liabilities to the other insurance company. The company that purchases the reinsurance policy is referred to as the "ceding company" or "cedent".[2]The company issuing the reinsurance policy is referred to as the "reinsurer". In the classic case, reinsurance helps insurance companies to remainsolventafter major claims events, likehurricanesorwildfires.[1]
The reinsurer may be either a specialist reinsurance company, which only undertakes reinsurance business, or another insurance company.
References
[change|change source]- ↑1.01.1"Reinsurance".Insurance Information Institute.2014-01-12.Retrieved2022-06-06.
- ↑Kagan, Julia (August 18, 2023)."Cedent: Overview and Examples in Insurance".Investopedia.
