In our discussions about reinsurance, we have explained that the main function of reinsurance companies is spreading out risk. However, you should understand that reinsurance companies don’t simply indemnify insurance companies of against risks. They actually do much more. Let’s take a closer look at the five major functions of a reinsurance company:
- Increases stability and security. As we have said, the major function of reinsurance companies is to spread out risk. This is especially in the case of an unusual or widespread loss event, such as a hurricane or tornado.
- Increases depth and width of coverage. When an insurance company is secure and stable, and when it is protected well for all manner of loss events, it can afford to offer more insurance policies. Also, it can offer a wider range of insurance policies, thus improving business.
- Helps with analysis and decision-making. A reinsurance company won’t simply take an insurance company on as a partner. It needs to know that the investment is worthwhile. The reinsurance company will help the insurance company evaluate its reinsurance needs, devise an effective reinsurance plan, and analyze risks and risk pricing.
- Provides an array of services. Reinsurance companies will also help the primary insurance company understand and coordinate its reinsurance needs. This is done by providing technology, training, organization, management, and even accounting.
- Helps with expansion. Because reinsurance companies provide security and take on risk, they give insurance companies the opportunity to expand their business through launching new products and services.
When a huge loss event occurs, or when there is a particularly stormy season (like last year’s hail storms in Texas), it can be difficult for insurance companies of any size to pay out all of the claims that they receive. Reinsurance makes it significantly more possible.
Filing an insurance claim after your property is damaged can be difficult, especially if the damage was the result of a large storm or other event. Not being able to settle your claim can be overwhelming and frustrating. If you need assistance, contact the Texas commercial insurance claim attorneys at the Voss Law Firm today: 888-614-7730.