To be fair it could happen in some circumstances but I don’t think it’s normal, there is just no business case, reinsuring works by the insurance company paying a part of the premiums to the reinsurer to insure X amount from the portfolio, reinsurer would have to do the same, you run out of money quite soon.
I don’t know that much though, I am new to the company and I am in IT, so it’s not my domain to know exactly how it works.
My finance teacher said that reinsurance often used financial derivatives to offset risk… is that true? Just made me have a wild flashback to like a couple decades ago.
Reinsurers don’t really take out their own insurance further, at least I haven’t heard of that happening. I do work for one of those Reinsurers
Maybe I remember it wrong, been a while since I had contact with the insurance industry.
Also might depend on national insurance regulations.
I assume you’re right since you are in the sector, but I don’t know where I picked up the notion, that reinsurers would reinsure themselves.
To be fair it could happen in some circumstances but I don’t think it’s normal, there is just no business case, reinsuring works by the insurance company paying a part of the premiums to the reinsurer to insure X amount from the portfolio, reinsurer would have to do the same, you run out of money quite soon.
I don’t know that much though, I am new to the company and I am in IT, so it’s not my domain to know exactly how it works.
My finance teacher said that reinsurance often used financial derivatives to offset risk… is that true? Just made me have a wild flashback to like a couple decades ago.