What is the Definition of Catastrophe Reinsurance?

What is the Definition of Catastrophe Reinsurance?

Reinsurance for catastrophic losses. The insurance industry is able to absorb the multibillion dollar losses caused by natural and man-made disasters such as hurricanes, earthquakes and terrorist attacks because losses are spread among thousands of companies including catastrophe reinsurers who operate on a global basis. Insurers’ ability and willingness to sell insurance fluctuates with the availability and cost of catastrophe reinsurance. After major disasters, such as Hurricane Andrew and the World Trade Center terrorist attack, the availability of catastrophe reinsurance becomes extremely limited. Claims deplete reinsurers’ capital and, as a result, companies are more selective in the type and amount of risks they assume. In addition, with available supply limited, prices for reinsurance rise. This contributes to an overall increase in prices for property insurance.

Source: Insurance Handbook A guide to insurance: what it does and how it works | https://www.iii.org/

Label: Insurance
Theme: Dictionary of Insurance Terms

Other Questions: What is the definition of Insurance?

What is the Definition of Catastrophe Reinsurance?

What is the Definition of Catastrophe Reinsurance?

Check out other definition of insurance terms below:

What is the Meaning of EQUITY In Insurance Terms?

In investments, the ownership interest of shareholders. In a corporation, stocks as opposed to bonds.

What is the Meaning of EQUITY INDEXED ANNUITY In Insurance Terms?

Nontraditional fixed annuity. The specified rate of interest guarantees a fixed minimum rate of interest like traditional fixed annuities. At the same time, additional interest may be credited to policy values based upon positive changes, if any, in an established index such as the S&P 500. The amount of additional interest depends upon the particular design of the policy. They are sold by licensed insurance agents and regulated by state insurance departments.

What is the Meaning of ESCROW ACCOUNT In Insurance Terms?

Funds that a lender collects to pay monthly premiums in mortgage and homeowners insurance, and sometimes to pay property taxes.

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