What is the Difference Between Proportional and Non-Proportional Reinsurance Agreements?

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Reinsurance is when an insurance company transfers risk to other parties by a formal agreement-- thereby lessening its liability on catastrophic or multiple losses. It is insurance for insurers and enables insurance companies to remain solvent after major claim events, such as hurricanes. Both Treaty and facultative reinsurance policies can be proportional or non-proportional in structure.

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Topics: Reinsurance, Reinsurance Agreements

What is Reinsurance?

image credit: garagestock/shutterstock.com

Risk is everywhere; whether you are a contractor, small business or a large corporation, you must guard against risk. Insurance companies must also take measures to guard against risk. Reinsurance is when an insurance company transfers risk to other parties by a formal agreement-- thereby lessening its liability on catastrophic or multiple losses. It is insurance for insurers, and enables insurance companies to remain solvent after major claim events, such as hurricanes. 

Here is some information on two major types of reinsurance and how they work. 

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Topics: construction insurance, Reinsurance

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