Approved Reinsurance
What Does Approved Reinsurance Mean?
Approved reinsurance is a reinsurance product offered by an insurance company that has been deemed stable and reliable by a regulatory government agency. Reinsurance involves one insurance company assuming a portion of the financial risk of other insurance companies in exchange for a regular fee. In essence, it acts as insurance for insurance companies.
Insuranceopedia Explains Approved Reinsurance
The standards for selling reinsurance are significantly stricter than those for regular insurance. Since reinsurers assume substantial financial risk by backing large portions of other insurance companies’ portfolios, they must demonstrate exceptional financial stability. Consequently, gaining approval to sell reinsurance is much more challenging. Due to these stringent requirements, only a few companies worldwide qualify to offer approved reinsurance, primarily because of their considerable size and robust financial foundation.
