Also known as insurance for insurers, reinsurance transfers and shares risk among companies. It is a safeguard for our industry.
Reinsurers manage a lot of complexity and risks, which is why it is so important to find a good one. Obviously, they need to meet various regulations and conditions to operate, but beyond that, what should you look for in a reinsurance provider?
- A provider that stands by insureds when losses occur. Reinsurance is provided as a contract of indemnity where direct insurers pay the loss before seeking reimbursement. You want a reinsurer that is responsive to your needs and there for you when it counts.
- An insurance company with strong financial ratings. You can visit AM Best to review ratings for any reinsurer, which range from D to A+. Their ratings are based on “a comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance, business profile and enterprise risk management,” and are considered the gold standard in the industry. Ideally, look for ratings of B+ (“good”) to A+ (“excellent”).
- Expertise you can rely on. Like insurers, reinsurers may specialize in various fields and types of insurance, so make sure your provider has you covered. Likewise, if your business is looking to expand into a new area, can your reinsurer provide the technical and administrative support you need and want?
What else is important to you and your business? Ongoing communication and responsiveness? Years of experience in the industry? Contracts that are easy to understand? Whatever it is, add it to your checklist when you’re looking for a reinsurance provider.
Unlike insurance companies, reinsurance providers operate more in the shadows, yet their role is critical to the industry. Do your research, focus on your priorities and interview more than one company before you choose your next reinsurance provider.