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Reinsurer

What Does Reinsurer Mean?

A reinsurer is an insurance company that takes financial risks from other insurance companies. They will also be responsible for future claims related to these risks.

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Insuranceopedia Explains Reinsurer

An insurance company that takes on too high of a risk has the possibility of going bankrupt. By passing this risk on to another company, they reduce the odds of reaching that outcome.

Insurance companies might also transfer a risk to a reinsurer because they might gain profit from the transfer if the payment to the reinsurer is less than what it received from the insured.

A risk can also be transferred when the original company (the ceding company) believes that the reinsurer knows more about the risk and its management.

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