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 Posted: Wed Jan 14, 2009 9:55 am Post subject: what is reinsurance in the context of life insurance company |
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| what is reinsurance - for life insurance companies ? |
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Jupiter
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| Posted: Wed Jan 14, 2009 11:38 am Post subject: |
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Reinsurance is when an insurance company purchases coverage from another insurer to cover certain risk. In a word its hedging against the exposures. Often companies with limited assets seek reinsurance in the secondary market.
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robust mollusc
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| Posted: Wed Jan 14, 2009 1:37 pm Post subject: |
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| Every carrier has different limits as to what they can/will insure themselves without having another company cover a portion of the benefit. The difficult part about reinsurance is that the "secondary" carrier's underwriting guidelines may be different than the primary carrier. Even the biggest carriers go to reinsurance on large face amount cases, but the amount varies substantially from carrier to carrier. |
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dgoldenz
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| Posted: Wed Jan 14, 2009 10:37 pm Post subject: insurance |
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You mean Insurance companies have a 'back up' plan for a claim which may be a large amount?  |
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sdchargersfan
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| Posted: Wed Jan 14, 2009 10:38 pm Post subject: insurance |
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| Do ALL Insurance companies have this 'reinsurance'? |
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sdchargersfan
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| Posted: Thu Jan 15, 2009 8:43 am Post subject: |
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| Quote: | | You mean Insurance companies have a 'back up' plan for a claim which may be a large amount? |
Yes, the insurance company if feels that certain loss would affect its profit may try to buy hedge against it. And, would get a reinsurance from the reinsurance company against payment. The insurer and the reinsurance company both would share the premium paid by the policy holder. The reinsurer then would share the loss with the insurance company against the policy.
| Quote: | | Do ALL Insurance companies have this 'reinsurance'? |
Insurers are increasingly seeking reinsurance against catastrophic disasters. And, apart from the reinsurance companies several institutional investors too are taking interest in the reinsurance business. Hence, we can expect that the reinsurance business will grow in volume in the future.
~Jeremy |
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JeremyHolter
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| Posted: Thu Jan 15, 2009 11:28 am Post subject: |
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| Basically, the reinsurance allows the insurance company to provide higher limits of insurance to a policy holder than the assets of the insurance company would permit. That way it helps to make the platform more predictable for the insurance provider. Even they need some kind of cushion against major losses. |
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Unicorn
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| Posted: Thu Mar 17, 2011 7:05 pm Post subject: Role of reincurance |
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what role does reinsurance play in life insurance
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Riaan
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| Posted: Fri Mar 18, 2011 5:03 am Post subject: |
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Reinsurance allows an insurance company (any line of insurance) to write new policies in excess of their actual capital reserves established for the payment of claims and other policyholder liabilities (cash values, paid-in capital) and other expenses of the insurance company (salaries and commissions, other business operating expenses).
Without reinsurance agreements, insurance companies would have been out of business decades ago.
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MaxHerr
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| Posted: Tue Apr 05, 2011 12:34 pm Post subject: |
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Insurance companies always have a backup plan. Reinsurance is hugh and i think its mainly when the amounts are very high
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Orlando_Insurance
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| Posted: Tue Apr 05, 2011 5:42 pm Post subject: |
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| Quote: | | Reinsurance is hugh and i think its mainly when the amounts are very high |
Reinsurance is required by state law because insurance companies do not have the capital reserves to fund 100% of the death benefits they are liable for on any given day if all of the insureds died that day. Without reinsurance, companies could not write new business.
It's not a "back up plan", it's the law.
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MaxHerr
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| Posted: Mon Jun 20, 2011 10:16 am Post subject: |
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Reinsurance is the insurance that one insurance company purchases from another insurance company in order to transfer risk from the insurer to the re insurer.
It is insurance for insurers. The basic intention behind reinsurance is to reduce the risks associated with the policies
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meenakshidpfoc
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| Posted: Mon Jun 20, 2011 4:18 pm Post subject: |
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| Quote: | | The basic intention behind reinsurance is to reduce the risks associated with the policies |
This is incorrect. While some reinsurance companies mitigate the risk being transferred to them by applying their own underwriting guidelines to decline a risk (a "facultative" reinsurance agreement), the true purpose of reinsurance is compliance with the financial regulation of insurance companies.
As stated prior to the post above, reinsurance is required because insurance companies cannot have more claims liability (face amount of life insurance/policy limits of liability) on their books than they have capital assets to pay those claims. To avoid being declared insolvent, the insurance company must have reinsurance agreements in place to cover the excess liability.
Without reinsurance, the vast majority of insurance companies, including reinsurance companies, would be unable to write new business because they don't have enough capital assets to pay 100% of their claims exposure if all the claims occurred on the same day.
Of course, on the day that happens, there will be other things far more important to worry about.
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MaxHerr
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