RETRO CESSIONS Meaning and
Definition
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Retro cessions refers to a financial term that describes the process of reinsuring a part or all of an insurer's risk exposure to another reinsurer. It involves transferring the liabilities and obligations of insurance policies from the primary reinsurer to a secondary reinsurer. The term "retro" in retro cessions comes from retrospective, indicating that this type of arrangement is typically made after the initial insurance coverage has been provided.
In retro cessions, the primary reinsurer seeks to mitigate its risk exposure by offloading a portion of the liabilities and potential claims associated with the policies it has reinsured. This can be done due to various factors, such as a desire to limit financial losses, manage capacity constraints, or conform to regulatory requirements.
The retro cessions agreement is established through a contract between the primary reinsurer and the secondary reinsurer. The terms of the agreement outline the specific portion of the risk to be transferred, the period of retrocession, and the financial considerations, such as premiums and commissions.
Retro cessions play a significant role in the reinsurance industry, as they provide risk-sharing mechanisms and help manage the overall risk profile of insurance companies. They enable primary reinsurers to reduce their exposure to catastrophic events or losses and maintain a balanced risk portfolio. Similarly, secondary reinsurers benefit from retro cessions by gaining exposure to different types of risk and receiving premiums for assuming these obligations.
Common Misspellings for RETRO CESSIONS
- eetro cessions
- detro cessions
- fetro cessions
- tetro cessions
- 5etro cessions
- 4etro cessions
- rwtro cessions
- rstro cessions
- rdtro cessions
- rrtro cessions
- r4tro cessions
- r3tro cessions
- rerro cessions
- refro cessions
- regro cessions
- reyro cessions
- re6ro cessions
- re5ro cessions
- reteo cessions
- retdo cessions
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