Title: Reinsurance This is based in part on an article written by the same author and published in <i>Foundations of Casualty Actuarial Science, Fourth Edition</i> by the Casualty Actuarial Society (2001).
Abstract: Abstract Reinsurance is a form of insurance. A reinsurance contract is legally an insurance contract; the reinsurer agrees to indemnify the ceding insurance company for a specified share of specified types of insurance claims paid by the ceding company for a single insurance policy or for a specified set of policies. The nature and purpose of reinsurance is to reduce the variability of the financial costs to insurance companies arising from the occurrence of specified insurance claims. It thus enhances innovation, competition, and efficiency in the insurance marketplace. This article briefly discusses the types of reinsurance companies, and the functions, forms, and costs of reinsurance. It also outlines a ‘typical’ reinsurance program for a medium‐sized insurance company. All these topics are more fully covered in other referenced articles and books.