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Insurance Glossary

Catastrophe Reinsurance

Industry

Definition

Reinsurance coverage that protects against losses from catastrophic events such as hurricanes, earthquakes, or floods that affect multiple policies simultaneously. Also known as Cat Cover, this protects insurers from events that could threaten their solvency.

Definición en Español

ES

Reaseguro Catastrófico

Cobertura de reaseguro que protege contra pérdidas de eventos catastróficos como huracanes, terremotos o inundaciones que afectan múltiples pólizas simultáneamente. También conocido como Cat Cover, esto protege a las aseguradoras de eventos que podrían amenazar su solvencia.

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Related Terms

Reinsurance
Insurance purchased by an insurance company (the ceding company) from another insurance company (the reinsurer) to transfer risk and protect against large losses. Reinsurance allows insurers to underwrite policies covering higher risks and larger amounts than they could handle independently.
Excess of Loss
A non-proportional reinsurance arrangement where the reinsurer pays losses that exceed a specified amount (attachment point), up to a maximum limit. The reinsurer only responds when losses exceed the retention, regardless of premium sharing.
Aggregate Limit
The maximum amount a reinsurer will pay for all covered losses during a specified period, typically one year. Once this limit is reached, the reinsurer has no further obligation to pay losses until the next period begins or the coverage is reinstated.
Actuary
A business professional who analyzes probabilities of risk and risk management, including calculation of premiums, dividends, and other applicable insurance industry standards.
Underwriting
The process by which an insurer evaluates the risk of insuring a person or property and determines coverage terms and premium rates.
Loss Ratio
The ratio of losses paid plus loss reserves to premiums earned, used by insurers to measure underwriting profitability and pricing adequacy.
Combined Ratio
The sum of the loss ratio and expense ratio, measuring an insurer's overall underwriting profitability. A ratio below 100% indicates underwriting profit.
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