Reinsurance in USA: definition, most common forms, types and advantages.
Business Owners in any domain try always to keep a balance in their market, as an effort to continue and develop for all parties as well as avoid facing great losses when each one is working alone. This is the case with Insurance and Reinsurance, where the insurer transfers a part or portion of the insurance policy or risks covered to the reinsurer in the form of a contract between them, and the reinsurer accepts this deal and gets a sum of the premium. In other words, the insurer is the direct protector of the insured and his properties, while the reinsurer is the indirect insurer, and the partner of the insurer in case of loss where the indemnities are divided between them.
In general, Reinsurance become an essential part of the insurance market and works side by side to support insurance in great events resulting in great losses such as death and huge material damages.
Most companies are running a business today as Insurance and Reinsurance together to keep an equilibrium in their budget and assets.
FAQ about Reinsurance
What is the most common form of Reinsurance?
The proportional treaties are the most common and oldest form of reinsurance, where a percentage of the ceding insured original policies is reinsured, but within certain limits, both parties agree to cover, any policies beyond the limits insured are uncovered by the reinsurance treaty.
What are the types of Reinsurance?
There are three main types of Reinsurance: Facultative, Proportional, and nonproportional. The Facultative is considered the oldest form of reinsurance, where reinsurance is purchased by an insurer for a single risk or a package of risks together. This type includes a one-off transaction, where the reinsurance company insists on covering its own underwriting for some or all the insurance policies. In the proportional type of treaty, the written risks are divided between the insurer and reinsurer to cover the risks that occur frequently.
The third type is the nonproportional treaties, used to cover extreme events and great costs. This type is based on the size of the claim to design the cover.
What are the advantages of Reinsurance?
Basically, insurance companies run their business as insurers for risks that may occur to the insured at any time during the insurance period, all types of insurance include risks, and sometimes the risks are great and may result in big losses and damages either bodily or material and the indemnities are beyond the insurance company to handle and may lead to business interruption or even stop.
Insurance companies are running work to obtain profits as any other business, to stay in the market as well as to develop, which is not possible without the support of another party. Reinsurance took this role as a partner for insurance in profits and losses. Reinsurance today is very important in the insurance business for the following reasons:
- Providing catastrophe protection.
- Stabilizing underwriting results.
- Spreading risks between two companies or more.
- Keeps the companies in a strong financial position.
- Dealing with great risks and handling them correctly increases the ability and efficiency of companies to manage risks with the least possible losses.
Top 30 Reinsurance Companies in the USA for 2023
Based on a survey on a survey done as a response from Reinsurance Companies, and according to beinsure.com ranking, the top 30 Reinsurance companies in the USA are:
- Re Group America
- Swiss Re America
- Everest Re
- Swiss Re Life& Health America
- National Indemnity
- Munich Re America
- Transatlantic Re
- General Re Corporation
- Odyssey Group
- Partner Re of United States
- Reinsurance Re United States
- SCOR Re
- General Re Life
- Markel Global Re Company
- Arch Re
- W. R Berkley Corporation
- Axis Re Company
- Toa Re Group of America
- Munich American Reassurance
- General Star Indemnity
- National Liability & Fire Company
- SCOR Global Life USA Re Company
- SCOR Global Life America
- COLUMBIA Insurance Company
- Sirius Point America Insurance Company
- SCOR Global Life Re Company of Delaware
- National Fire & Marine Insurance Company
- General Star National Insurance Company
- Genesis Insurance Company
- Aspen American Insurance Company