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Insurance Glossary

Reinsurance

Industry

Definition

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.

Definición en Español

ES

Reaseguro

Seguro comprado por una compañía de seguros (la compañía cedente) de otra compañía de seguros (el reasegurador) para transferir riesgo y protegerse contra grandes pérdidas. El reaseguro permite a las aseguradoras suscribir pólizas que cubren riesgos más altos y montos más grandes de lo que podrían manejar independientemente.

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Related Terms

Ceding Company
The primary insurance company that purchases reinsurance to transfer part of its risk to a reinsurer. The ceding company retains a portion of the risk and cedes the remainder to the reinsurer.
Reinsurer
An insurance company that assumes risk from another insurance company through a reinsurance agreement. The reinsurer provides financial protection to the ceding company against large or catastrophic losses.
Treaty Reinsurance
A reinsurance agreement where the reinsurer automatically accepts all risks within a defined category that the ceding company underwrites, without evaluating each risk individually. This provides automatic coverage for a portfolio of policies.
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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