Reinsurance
Now we know that an insurance company works on the concept of risk pooling and then covers the people who need the relevant coverage. There is an idea reinsurance when multiple insurance companies pool their risk by purchasing insurance policies from other companies.
In order to limit the amount of damage the primary insurance company will carry in case of a disaster. By pooling such risk, a primary insurance company can insure clients whose coverage will be too large for that single company. Thus, when a renewal occurs, the amount of claim paid by the insured is generally shared by all insurance companies involved in the pool. Even renewed companies move their institutions to higher risk. This resale company is called reverse-insurance.
Now we know that an insurance company works on the concept of risk pooling and then covers the people who need the relevant coverage. There is an idea reinsurance when multiple insurance companies pool their risk by purchasing insurance policies from other companies.
In order to limit the amount of damage the primary insurance company will carry in case of a disaster. By pooling such risk, a primary insurance company can insure clients whose coverage will be too large for that single company. Thus, when a renewal occurs, the amount of claim paid by the insured is generally shared by all insurance companies involved in the pool. Even renewed companies move their institutions to higher risk. This resale company is called reverse-insurance.