reinsurance

Definition

An arrangement where an insurance company transfers a portion of its risk to another company to protect itself from extreme losses, such as those caused by large-scale natural disasters.

Etymology

Derived from the prefix 're-' meaning 'again' or 'back' combined with 'insurance,' which itself traces back to the Old French 'enseurer,' meaning to ensure or make certain.

In the news

The European Central Bank is proposing a system that uses reinsurance to pool risks from natural disasters, ensuring that individual countries don't have to carry the entire financial burden of climate-related damages alone.

Someone will have to pay: Climate damage - a new blow to Europe's public finances

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