Definition

1. Noun:
   • The practice of sharing insurance risk among multiple insurers: "Reinsurance" refers to the process where an insurance company (the ceding company) transfers a portion of its risk portfolio to another party (the reinsurer) to reduce the likelihood of paying a large obligation resulting from an insurance claim.
   • A contract for such risk transfer: It can also refer to the specific contract or agreement that formalizes this transfer of risk and premium.

Usage

• Reinsurance is a fundamental concept in the global insurance industry, used to manage risk exposure and financial stability.
• It is typically used in financial, business, and insurance contexts.
• Common collocations include: , , , .

Examples

• Noun:
  • The primary insurer purchased reinsurance to protect itself from catastrophic losses.
  • A strong reinsurance program is essential for the company's solvency.
  • The terms of the reinsurance contract were negotiated over several months.

Advanced Usage

• "Treaty reinsurance": A standing agreement where the reinsurer automatically accepts a share of all risks of a defined class that the ceding company insures.
  • The company secured treaty reinsurance for all its property insurance policies.
• "Facultative reinsurance": A case-by-case agreement where the reinsurer evaluates and accepts or declines individual risks.
  • For this unique and high-value risk, they sought facultative reinsurance.

Variants and Related Words

• Reinsure (verb): To transfer insurance risk to a reinsurer.
  • The company decided to reinsure a portion of its liability portfolio.
• Reinsurer (noun): The company that assumes risk from the primary insurer.
  • The claim was partially paid by the reinsurer.

Synonyms

• Risk transfer: The general act of shifting risk to another party.
• Cession: The amount of risk transferred to a reinsurer.

Related Phrases

• Retrocession: The process where a reinsurer transfers part of the risk it has assumed to another reinsurer (essentially, reinsurance for reinsurers).
  • The reinsurer used retrocession to further spread its risk.
• Ceding commission: A fee paid by the reinsurer to the ceding company to cover acquisition and administrative costs.
  • The agreement included a generous ceding commission.

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