Reinsurance – the principle of risk spreading
Reinsurance is "insurance for insurance companies”, in other words a “second level of insurance." it was not long before the risk of suffering dangerously high losses as a consequence of payments for major claims prompted a need for "reinsurance" among so-called "primary" insurers. The oldest known reinsurance contracts or "treaties" date back to the fourteenth century.
The international reinsurance sector has since developed into a highly specialised financial service. Large individual risks and natural catastrophe risks are spread across the entire globe so as to minimise the potential loss for a single company. Reinsurers, for their part, purchase coverage for assumed major risks (retrocessions).
Highly specialised products and services
In addition to the traditional business of covering risks in property & casualty and life & health reinsurance, support is provided to new insurance companies during the cost-intensive start-up phase. The goal pursued by insurance companies (especially those listed on the stock exchange) of ensuring balance sheet continuity is achieved, in part, by means of reinsurance. A further task of reinsurers is to advise insurers in underwriting, pricing and the development of new insurance products, among other things. Automated systems for consulting services or for distribution/risk assessment are also offered.
Since treaty terms and conditions are negotiated in each individual case, reinsurers have built up a very high level of expertise in risk-appropriate underwriting. To this end they need experts from highly divers fields. The reinsurance industry today employs not only insurance specialists, but also mathematicians, meteorologists, medical experts, engineers, computer scientists etc.
Through the provision of such highly sophisticated services - the specifics of which are frequently extremely complex - Hannover Re today ranks as one of the leading reinsurance groups in the world.