The core principle of insurance risk management is the equitable distribution of losses, where the financial burden of the few is shared by the many, achieved through the pooling of premiums. This risk diffusion process primarily occurs within the realm of insurance companies, often denoted as primary insurers. However, the scope of risk management extends further, encompassing the engagement of additional stakeholders, typically known as reinsurers. Reinsurance takes the form of a contractual agreement, where one insurance company, in exchange for a premium, assumes responsibility for indemnifying another insurer against the entirety or a portion of potential losses under their insurance policies. This mutual relationship between insurers and reinsurers underscores the fundamental purpose of insurance: the efficient dispersion of policyholders' risks. The primary objective of reinsurance risk management mechanisms is to provide a robust defense against catastrophic events that unfold on a global scale.
Harrington, S. E., & Niehaus, G. R. (2003). Risk Management and Insurance. McGraw-Hill/Irwin.
Grace, M. F., Klein, R. W., & Phillips, R. D. (2004). Risk Financing. Wiley.
Cummins, D. J., & Weiss, M. A. (2009). Convergence of Insurance and Financial Markets: Hybrid and Securitized Risk-Transfer Solutions. The Journal of Risk and Insurance, 76(3), 493-545.
Browne, M. J., & Hoyt, R. E. (2000). The demand for reinsurance: Theory and empirical tests. Journal of Risk and Insurance, 67(1), 15-38.
Global: largest reinsurers 2024, by net premiums | Statista
Swiss Re Institute. (Yearly). Sigma Report on Catastrophe Risk.
Munich Re. (Yearly). Topics Geo - Natural Catastrophes.
Federal Emergency Management Agency (FEMA). (Yearly). National Flood Insurance Program (NFIP) Reports.
National Oceanic and Atmospheric Administration (NOAA). (Yearly). National Centers for Environmental Information (NCEI) - Climate Data.
National Association of Insurance Commissioners (NAIC) USA.
Prudential Regulation Authority (PRA) UK.
Butler, J.S., The Legal Position of Reinsurance Brokers, London: ROA, 1979.
https://eb-journals.rtu.lv/eb/article/view/eb-2017-0015
Climate-and-catastrophe-insights-report.pdf (aon.com)
(Shah & Ahmed, 2024)
Shah, H. A., & Ahmed, A. (2024). Mitigating Catastrophic Events: Assessing the Effectiveness of Reinsurance Risk Management Mechanisms. International Journal of Academic Research in Business & Social Sciences, 14(6), 1502–1507.
Copyright: © 2024 The Author(s)
Published by Knowledge Words Publications (www.kwpublications.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
