Unauthorized Reinsurance

Published: | Updated: September 17, 2017

Definition - What does Unauthorized Reinsurance mean?

Unauthorized reinsurance is when a reinsurer attempts to do business in an area or with an insurance company that is prohibited by law. There are regulations for reinsurance just as there are for insurance. If a reinsurer does not follow these regulations, then it could be in danger of providing unauthorized reinsurance

Insuranceopedia explains Unauthorized Reinsurance

Unauthorized reinsurance can constitute a serious legal problem. For example, say a reinsurer in Maine only has legal permission to do business with insurance companies in Maine. If this reinsurer tries to do business with an insurance company from Louisiana, this would be illegal and could result in a lawsuit.

Insurance companies who buy unauthorized reinsurance from reinsurers can quickly find themselves responsible for all of the claims that they thought they had covered by their reinsurance. Unauthorized reinsurance is not actually legitimate and therefore provides no actual coverage. This could amount to heavy financial losses for the insurance company.


How Well Do You Know Your Life Insurance?

The more you know about life insurance, the better prepared you are to find the best coverage for you.

Whether you're just starting to look into life insurance coverage or you've carried a policy for years, there's always something to learn.

Share this:

Connect with us

Email Newsletter

Join thousands receiving the latest content and insights on the insurance industry.