Reinsurance is an agreement between insurance companies under which one accepts all or part of the risk or loss of the other. Most primary companies insure only part of the risk on any given policy and the amount varies among carriers. The remainder of the policy limits are covered by reinsurance entities. The less primary risk that a company insures, the more premium it has to pay to the reinsurer to cover the remaining policy limits. In general, smaller companies are able to cover only a relatively small proportion of the liability limit. This results in large premium payments to reinsurers. Larger companies can cover a large proportion safely, thus reducing the payments they must cede to reinsurers, which indirectly reduces the cost of insurance to their policyholders.
In addition to standard industry brokerage placements, Fallquist Actuaries can coordinate affinity process enrollments to facilitate reinsurance needs. When proprietary risk-transfer or risk-sharing solutions are requested in limited partnerships, joint ventures, pools, captives, we provide management expertise throughout the entire process.