The Brainshark’s PowerPoint

The Importance of Reinsurance

The PowerPoint narration on Introduction to Reinsurance by Brainshark provides a complete review of Reinsurance. As the presentation progressed, I gained a better understanding of what reinsurance is, how it works, and how vital it is to the insurance sector. Reinsurance, according to the narrator, is “a contract of indemnification” or an agreement between a ceding and a reinsurer. In this case, one insurance company (the ceding company) tries to insure itself against all or part of the loss arising from a specific high-risk cover by another insurance company (the reinsurer). Reinsurance spreads risks even farther in this manner.

Benefits of Reinsurance

According to the narration, in addition to covering losses, a corporation will purchase reinsurance in order to generate a profit through ceding commissions and cover their expenses. Though reinsurance a small insurance company gets a large-line capacity that enables it to cover significant amounts of risks (that would otherwise be legally impossible) giving it the ability to compete with bigger companies. In the same manner, since there is a limit on the amount of premium a company can write, reinsurance gives the company a capacity to write more premiums (than legally possible). Also, it stabilizes the experience of losses; an insurance company can overcome the fluctuations over a given period. Moreover, in moments of catastrophic losses, reinsurance provides relief through loss sharing by one or more reinsurance companies. Reinsurance companies interact with many insurance companies and thus have the best experience on different risks. With this information, they can provide help to new companies coming into the market, or those that want to venture on a new risk coverage. Lastly, reinsurance provides room for social purposes such as through portfolio insurance, or through banding to cover poor risks.

Conclusion

In conclusion, Brainshark’s PowerPoint narration on Introduction to Reinsurance has been resourceful in my quest to understand the topic. The descriptions were clear and well-articulated to my level of comprehension; I now understand the importance of Reinsurance.