reinsurance

re·in·sure   (rē'ĭn-shŏŏr')    tr.v.   re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. re'in·sur'ance n., re'in·sur'er n.

Reinsurance

The process of insurance companies insuring underwritten policies with other institutions in order to offset exposure.

Investopedia Commentary

This procedure is used by insurance companies to reduce outright risks associated with underwritten policies by spreading risks across alternative institutions. It's like buying an insurance policy for an insurance policy.

See also: Catastrophe Bond, Life Insurance

Main Entry: re·in·sur·ance
Pronunciation: "rE-&n-'shur-&ns, -'in-"shur-
Function: noun
: insurance or indemnification by a second insurer of all or part of a risk assumed by another insurer as contracted for by the first insurer —see also CEDE —compare DIRECT INSURANCE, RETROCESSION 3