Reinsurance Intermediary

Example

“The regional insurance company hired a reinsurance intermediary to help them find coverage for their earthquake exposure and negotiate favorable treaty terms with Lloyd's of London.”

Memory Tip

Think 'Middleman for the Insurance of Insurance' - they're the go-between when insurers need to insure themselves.

Why It Matters

Reinsurance intermediaries help ensure your insurance company can access appropriate risk transfer mechanisms at competitive rates. Their expertise in global reinsurance markets can help keep your insurance costs lower while maintaining your insurer's financial stability.

Common Misconception

Consumers typically don't know reinsurance intermediaries exist, assuming insurance companies handle all reinsurance directly. Some might think these intermediaries increase costs, when actually their market expertise and relationships often help insurers secure better reinsurance terms.

In Practice

Mountain State Insurance wants to write $500 million in wildfire coverage but can only retain $50 million of risk. Their reinsurance intermediary contacts 12 different reinsurers globally, ultimately arranging coverage where Reinsurer A takes $200 million of exposure at 15% of premium, Reinsurer B takes $150 million at 12% of premium, and Reinsurer C takes the remaining $100 million at 18% of premium. The intermediary earns a 5% commission on the reinsurance premiums for facilitating these arrangements.

Etymology

Combines 'reinsurance' with 'intermediary' from Latin 'intermedius' (in the middle). This specialized role developed in the 19th century as reinsurance markets became more complex and international.

Common Misspellings

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