The tenets of reinsurance

August 15, 2021

The basic tenets and concept of insurance are becoming matters of priority among many policy holders as more people become aware of the benefits of insurance. However, the task at hand is how to go about increasing the awareness and comprehension of reinsurance, which to date is still perceived as a foreign, if not a challenging concept to grasp for many people. The issue with this lack of awareness and comprehension is a consequence of the limited information or rather the lack of rigor with which masses are enlightened about reinsurance in terms of what it entails and what benefits it entails. This article seeks to provide an overview of reinsurance in the most simplistic of terms.

For starters, reinsurance has been arguably one of the better aspects of the insurance industry in terms of returns and performance. In essence, the perks of reinsurance are such that they provide stability in cases where losses are inevitable in situations where the percentage of policy holders looking to repair damages is increasingly high. Reinsurance especially comes in handy in situations where catastrophes are the order of the day. Looking at it from a perspective where the number of claims is overwhelmingly large in a limited period, reinsurance becomes a source of refuge especially to insurance companies that may not have the financial muscle to pay the claims and still maintain operations.

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