reinsurance

/'ri:in'ʃuərəns/

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Word: Reinsurance

Part of Speech: Noun

Definition: Reinsurance is a way for insurance companies to share the risk of providing insurance. When an insurance company sells a policy to a customer, they promise to pay for certain losses. If those losses are very large, the insurance company might not be able to pay all the claims. To help with this, they can buy reinsurance, which means they pay part of their premium to another company. This second company agrees to take on some of the risk. This way, if many claims come in, the first company is protected.

Usage Instructions:

• Reinsurance is usually discussed in the context of business and finance.
• It is often used when talking about large insurance policies or in discussions about risk management.

Example Sentence:

"The insurance company bought reinsurance to protect itself from having to pay out too much money if a natural disaster occurred."

Advanced Usage:

• Reinsurance can be categorized into two main types: "facultative reinsurance," where the reinsurer reviews each policy and decides whether to take on the risk, and "treaty reinsurance," where the reinsurer agrees in advance to accept a certain amount of risk from the insurer.

Word Variants:

• Reinsure (verb): To obtain reinsurance. For example, "The company decided to reinsure its policies to reduce potential losses."
• Reinsurer (noun): A company that provides reinsurance. For example, "The reinsurer agreed to cover a portion of the risk."

Different Meanings:

Reinsurance primarily refers to the insurance of insurance companies. It does not typically have different meanings outside this context.

Synonyms:

• Risk-sharing
• Insurance for insurers
• Backing (in a general sense)

Idioms and Phrasal Verbs:

There are no specific idioms or phrasal verbs directly related to "reinsurance." However, you might encounter phrases like "share the risk," which is related to the concept of reinsurance.

Summary:

Reinsurance is an important financial tool that helps insurance companies manage their risks by sharing them with other companies.

Academic

Noun

1. 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