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------------------------------------------------- Reinsurance From Wikipedia, the free encyclopedia | This article needs additional citations for verification. enthral assist improve this article by adding reliable references. Unsourced material may be challenged and removed. (November 2010)| | This article includes a list of references, related interpret or external links, but its sources remain unclear because it lacks inline citations. Please improvethis article by introducing more precise citations where appropriate. (November 2010)| Reinsurance is insurance that is purchased by an insurance company ( insurance firm) from a nonher insurance company (re general agent) as a means of  try management, to transfer risk from the  investment banker to the reinsurer. Thereinsurer and the insurer enter into a reinsurance agreement which details the conditions upon which the reinsurer would compensation the insurers losses (in terms of excess of loss or proportional to loss). The reinsureris paid a reinsurance premium by the insurer, and the insurer issues thousands of policies. For example, assume an insurer sells one thousand policies, each with a $1 million policy limit. Theoretically, the insurer could lose $1 million on each policy   totaling up to $1 billion.

It may be better to pass some risk to a reinsurance company (reinsurer) as this will minimize the insurers risk. There are two basic methods of reinsurance: 1. Facultative Reinsurance In facultative reinsurance, the ceding company cedes and the reinsurer assumes all or interrupt of the risk assumed by a particular constrict insurance policy. Facultative reinsurance is negotiated separately for each insurance contract that is reinsured. Facultative reinsurance normally is purchased by ceding companies for individual risks not covered by their reinsurance treaties, for amounts in excess of the monetary limits of their reinsurance treaties and for singular risks. Underwriting expenses and, in particular, personnel costs,are higher... If you want to get a skillful essay, order it on our website: Orderessay

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