Fox Export

When an insurer insures some or all of his risks with another insurer in order to reduce his liability, it is called re-insurance or sub-insurance. For example, A & Co. insures the house of Ram for Rs. 50 Lakhs. Then A & Co. gets the same insured with B & Co, it is re-insurance. In this case A & Co. is called re-insured and B & Co. the re-insurer. A contract of re-insurance is a contract of indemnity just like the original contract of insurance. Re-insurance is helpful in wider distribution of risk.

An insurer can enter into more contracts with the help of re-insurance. The insured is secured from the trouble of contracting with different insurers. The insurer can contract to indemnify more risk. Re-insurance also stabilizes income and loss over a period of time. It enables an insurer to undertake risks involving huge amounts. There are many people using re-insurance for its special features.          

Friday, February 29th, 2008 at 9:51 am.
Filed under Business, Insurance.
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