Insurance Glossary

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Insurance Term - Re-insurance

Re-insurance is defined as insurance that an insurance company buys for its own protection. The risk of loss is spread out, so that a disproportionately large loss under a single policy does not fall on one company. Re-insurance enables an insurance company to expand its capacity; stabilize its underwriting results; finance its expanding volume; secure catastrophe protection against shock losses; withdraw from a line of business or a geographical area within a specified time period. In other words, the acceptance by one or more insurers known as re-insurer or assuming companies, of a portion of the risk underwritten by another insurer that has contracted with an employer for the entire coverage.

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