what is reinsurance? (1 Viewer)

[m123]

what is reinsurance?

 

[redslert]

reinsurance is when insurance companies sell their liablities/policies to other insurance companies. So in a case when if one of the policy makes a claim, then i think both companies will share in the payout (will really depend on the contract between the insurance companies). Reason why other insurance companies will by reinsurance is that their also receive part of the premium.

But i'm sure all the 'real' actuaries on here can tell you all about it

 

[§eraphim]

its basically insurance taken out by an insurance company. against changes in its insurance liabilities, esp claimis. reinsurance requires a substantiated transfer of risk from the insurer to the reinsurer otherwise its just another accounting trick to smooth revenues (refer to current news on warren buffett for further info). there are numerous other ways to transfer risk besides reinsurance which include securitisation. eg insurance bonds and insurance derivatives. for further information refer to "actuarial theory and practice"

 

[Eagles]

If its beyond the course of acct1501.. is it do able?

i thought it isn't.

 

[Affinity]

and reinsurance allows risks to be diluted/pooled/shared/whatever