reinsurance: meaning, definition, pronunciation and examples
C2Formal, technical
Quick answer
What does “reinsurance” mean?
Insurance purchased by an insurance company to protect itself against the risk of very large claims, essentially insurance for insurers.
Audio
Pronunciation
Definition
Meaning and Definition
Insurance purchased by an insurance company to protect itself against the risk of very large claims, essentially insurance for insurers.
The practice or contract of one insurer (the reinsurer) accepting all or part of the risk of another insurer (the ceding company) for a premium. It spreads risk and provides financial stability.
Dialectal Variation
British vs American Usage
Differences
No significant differences in meaning or usage. The concept and industry terminology are global.
Connotations
Neutral professional term in both varieties.
Frequency
Equally low-frequency and specialized in both dialects, confined to finance, insurance, and regulatory contexts.
Grammar
How to Use “reinsurance” in a Sentence
[insurer] purchases reinsurance from [reinsurer] for [risk/portfolio][insurer] cedes [risk/percentage] to reinsurancereinsurance for [catastrophic events/large losses]Vocabulary
Collocations
Examples
Examples of “reinsurance” in a Sentence
verb
British English
- The syndicate decided to reinsure the marine portfolio.
- They are reinsuring that liability exposure in London.
American English
- The company reinsures its catastrophic risk through a Bermuda-based firm.
- We need to reinsure this book of business.
adverb
British English
- No standard adverbial form is used.
- Not applicable.
American English
- No standard adverbial form is used.
- Not applicable.
adjective
British English
- The reinsurance market in Lloyd's is highly specialised.
- They sought reinsurance coverage from a Swiss partner.
American English
- The reinsurance contract has a one-year term.
- Reinsurance premiums have risen following the disasters.
Usage
Meaning in Context
Business
The primary context. 'The insurer's reinsurance strategy protected its balance sheet after the hurricane.'
Academic
Used in economics, finance, and risk management papers. 'The study models the equilibrium in a reinsurance market.'
Everyday
Virtually never used in everyday conversation.
Technical
Core term in actuarial science, underwriting, and insurance regulation. 'The treaty includes a 10% coinsurance clause.'
Vocabulary
Synonyms of “reinsurance”
Strong
Neutral
Weak
Vocabulary
Antonyms of “reinsurance”
Watch out
Common Mistakes When Using “reinsurance”
- Mispronouncing as 're-insurance' with equal stress on 're' and 'in'. Primary stress is on the third syllable: 'SHOOR' or 'SHOR'.
- Using it to mean 'getting insurance again' for a car or house.
- Confusing the ceding company (the buyer) with the reinsurer (the seller).
FAQ
Frequently Asked Questions
No. Double insurance is when one person/entity buys multiple insurance policies for the same asset from different insurers, often leading to over-insurance. Reinsurance is when an insurer buys insurance for its own risk portfolio from another (re)insurer.
Insurance companies (called cedents or ceding companies) buy reinsurance. The buyers are not the general public but the insurers themselves.
An insurer (or primary insurer) sells insurance policies directly to individuals and businesses. A reinsurer sells insurance to these primary insurers, taking on part of their risk.
A small insurance company insures 10,000 homes. It fears a giant storm could wipe out its finances. It pays a premium to a large reinsurance company. The reinsurer agrees to pay for any storm damage claims above $10 million. This protects the small company from bankruptcy.
Reinsurance is usually formal, technical in register.
Reinsurance: in British English it is pronounced /ˌriː.ɪnˈʃɔː.rəns/, and in American English it is pronounced /ˌriː.ɪnˈʃʊr.əns/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “None. It is a technical term not used idiomatically.”
Learning
Memory Aids
Mnemonic
Think RE-INSURANCE: INSURANCE all over again (RE-), but this time for the insurance company itself.
Conceptual Metaphor
A SAFETY NET for the SAFETY NET. Insurance is a safety net for people/companies; reinsurance is the larger, stronger net that catches the insurer if its own net is overloaded.
Practice
Quiz
What is the primary purpose of reinsurance?