Delaware Business Insurance Update by CNC Insurance Associates Inc. " What is Reinsurance and Why Do I Care ? ". 11-4-14

Reinsurance is unknown to most small business owners. Actually, the term and the concept of reinsurance has probably never been discussed in broker/client insurance meetings.  So why bother?
Reinsurance is going through an historic change. This change may affect the overall insurance market sometime in the future which could create insurance issues for small business.  So let's break it down. Reinsurance, insures the insurance companies. They are at the top of the heap in the insurance world. The reinsurance industry makes sure that insurance companies can pay really big losses and claims that otherwise would bankrupt them.  The reinsurance industry is under fire right now as new money comes to the top of the insurance food chain. Hedge funds and other money funds  are telling underlying insurance companies that they can cover the really big losses as good as reinsurance but can do it at a lessor cost.  This has given the reinsurance industry competition it has never really seen before.
As a small business owner this is important to watch because when the losses and claims hit, will the new money funds be able to respond and pay claims like the reinsurers have done over a hundred years or more.  Or, will the new money just pack up their bags and get out of the game. We will see what happens when the next catastrophe happens.  In the insurance business the rubber meets the road when it is time to pay the claims. Until next time be careful out there and know your risks.

G.Kevin Nemith President CNC Insurance Associates Inc. & The Small Business Insurance  Center
Serving DE, MD, VA, NJ, & MD
www.cncinsurance.com
www.bizinsurancetv.org

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