Approved Reinsurance

Definition - What does Approved Reinsurance mean?

Approved reinsurance is a product offered by insurance companies that a regulatory government agency deems stable enough to sell it. Reinsurance refers to the practice of an insurance company taking on some of the financial risk of other insurance companies in exchange for a regular fee. In other words, it is like insurance for insurance companies.

Insuranceopedia explains Approved Reinsurance

The standards for selling reinsurance are even stricter than those for selling regular insurance. Since a reinsurer backs up large portions of the portfolios of other insurance companies, the reinsurer takes on even more financial risk. As a result, it is much harder for a company to be approved to sell reinsurance. Because of the high standards, only a few companies around the world sell approved reinsurance. They qualify due to their large size and financial stability.

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