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Reinsurance is insurance for insurers, experts tell Georgia study committee
Summary
Industry representatives told a Georgia House study committee that reinsurance — insurance purchased by insurers — increases capacity and stability for primary carriers and can blunt the financial impact of major storms; committee members and presenters discussed NOAA data, market trends and federal crop reinsurance.
Jason Rudis, a policy representative with the Reinsurance Association of America, told the Georgia House study committee on reinsurance that “the easiest way to think about reinsurance is that it's insurance for insurance companies.” Rudis, a former insurer and legislative staffer, gave a primer on how reinsurance works and outlined how it is used in Georgia.
The presentation explained reinsurance as a business-to-business arrangement: policyholders pay insurers, insurers retain some risk and pay premiums to reinsurers to cede portions of that risk. Rudis described treaty reinsurance, which covers classes or whole books of business, and facultative reinsurance, which can be bought for individual policies or unusual risks. “Reinsurance is b 2 b,” he said, clarifying that it does not interface directly with policyholders.
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