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The of Reinsurance

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									In every business, there is an element of risk involved. And insurance is one of the
ways most business ventures chose to de-risk their businesses. It is similar to the way
a person opts for the best health insurance to cover any unseen illness or accident
which can hamper his financial stability.
  Just as individuals and businesses take the help of insurance companies to de-risk
their lives and businesses, the insurance companies too de-risk their business by going
the reinsurance way. It helps the insurance companies to carry the material
consequences of losses in their line of business. And insurance companies carry huge
risks in their businesses.
  So insurance companies pool the risks of large number of individuals and businesses
and Reinsurance companies in turn pool in the risks of a large number of insurance
companies. Reinsurance companies support the insurance companies by mitigating
risks involved in calamities which do not happen under normal circumstances. They
also provide the insurance companies with much needed expertise in underwriting,
claims management and actuarial knowledge which in turn helps them reduce their
own risks.
  Under normal circumstances no insurance company would need the help of a
reinsurer. But when a major calamity like an earthquake happens, the casualty is much
higher than anticipated and without the help of a reinsurer; the insurance company
might not be in a position to honor their commitments to such a large number of
claims. Putting it simply, if under normal circumstances 20 people die in a town in a
year and due to a flood, 500 people died in year 鈥?no insurance company would be
in a position to make good the commitment of the insurance contract 鈥?that 鈥檚
when reinsurance helps.
  Reinsurance is bigger in the general insurance industry more than the life insurance
industry. There are more than 200 large reinsurance companies across the world some
catering to very specific types of insurance companies. And yes, if you want to know
how the reinsurance companies cover their risks in turn 鈥搕 he process is called
retrocession!
  About Author:
  MyInsuranceClub.com is an Online Insurance Price & Features Comparison Website
in India. Visitors can easily find the best life insurance policy suited for them by
comparing insurance plans offered by different life insurance companies in India.

								
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