When choosing an insurance company, many consumers will select the one that gives them the lowest quote or has the best reviews online. This is not always the best way to shop, but it is understandable. For regular, everyday people, understanding the insurance business can seem next to impossible. But how do insurance companies shop for their insurance? They are fully immersed in the industry, so they clearly put some effort into choosing a reinsurance company.
To begin with, when choosing a reinsurance company, insurance companies are more like the consumer than you would imagine. They do research into the reinsurer's reputation to see if it is well-respected and has a history of paying claims fully and quickly. They also want to make sure the reinsurance company is easy to work with and doesn't have a history of flying off the deep end when disputes arise. Additionally, insurance companies care about cost just like we do. They want to make sure the premiums they are paying are not more than they can handle. Also, they make sure that they have money on hand to pay for things that are not covered if it comes to that.
On the flip side, insurance companies will also consider different things when shopping for a reinsurance company. Since the reinsurance company is being used to back them up on bigger claims that spill over, they want to make sure the reinsurance company is financially stable and can take a big financial hit without going bankrupt. It is their company's backbone and if it can't support them, everything could crumble.