REINSURANCE

Reinsurance

Reinsurance is insurance that is purchased by an insurance company from one or more other insurance companies as a means of risk management, sometimes in practice including tax mitigation and other reasons described below. The ceding company and the reinsurer enter into a reinsurance agreement which details the conditions upon which the reinsurer would pay a share of the claims incurred by the ceding company. The reinsurer is paid a "reinsurance premium" by the ceding company, which issues insurance policies to its own policyholders.

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reinsurance

Noun

  1. Insurance purchased by insurance companies that spreads the risk associated with selling insurance around so the danger of one large monetary loss is minimized.


The above text is a snippet from Wiktionary: reinsurance
and as such is available under the Creative Commons Attribution/Share-Alike License.

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