Reinsurance (Noun)
Meaning
Sharing the risk by insurance companies; part or all of the insurer's risk is assumed by other companies in return for part of the premium paid by the insured; "reinsurance enables a client to get coverage that would be too great for any one company to assume".
Classification
Nouns denoting possession and transfer of possession.
Examples
- To minimize the potential financial impact of natural disasters, insurance companies often rely on reinsurance to spread their risk among other specialized companies.
- By entering into reinsurance agreements, insurers can shift part of the premium payments and risk exposure to the reinsurer in exchange for additional coverage.
- This method of sharing the financial burden has been an integral part of the insurance industry, with many firms regularly utilizing reinsurance as a strategy for managing large risks.
- To enable more clients to get adequate coverage for valuable items, insurers work closely with reinsurers, splitting both premiums and liabilities among parties.
- Some insurers establish exclusive agreements with select reinsurance partners, building on this essential support structure as the companies adapt to market trends.