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Glossary Term: REINSURANCE

Definition(s) for REINSURANCE:


1. ) term used to refer to the spreading of risk and division of client premiums among insurance companies allowing the sharing of the burden of a large risk.

2. ) Reinsurance is the transfer, with indemni- fication, of all or part of the underwriting risk from one insurer to another for a portion of the premium or other consideration. Reinsurance contacts may be on an excessof- loss or quota-share basis, the latter being when the primary underwriter and the reinsurer proportionately share all insured losses from the first dollar. Reinsurance includes insurance coverage arranged by a bank holding

3. ) An Arrangement In Which A Reinsurance Company, The Reinsurer, Agrees To Indemnify Another Insurance Or Reinsurance Company, The Ceding Company, Against All Or A Portion Of The Insurance Or Reinsurance Risks Underwritten By The Ceding Company Under One Or More Policies. Reinsurance Can Provide A Ceding Company With Several Benefits, Including A Reduction In Net Liability On Individual Risks And Catastrophe Protection From Large Or Multiple Losses. Reinsurance Also Provides A Ceding Company With Additional Underwriting Capacity By Permitting It To Accept Larger Risks And Write More Business Than Would Be Possible Without A Concomitant Increase In Capital And Surplus, And Facilitates The Maintenance Of Acceptable Financial Ratios By The Ceding Company. Reinsurance Does Not Legally Discharge The Primary Insurer From Its Liability With Respect To Its Obligations To The Insured.


See Also:
REINSURANCE RECOVERABLES, TREATY REINSURANCE, CATASTROPHE REINSURANCE, FACULTATIVE REINSURANCE, NON-PROPORTIONAL REINSURANCE, PROPORTIONAL REINSURANCE, QUOTA SHARE REINSURANCE


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