Bharti AXA INSURANCE GLOSSARY Catastrophe Reinsurance An insurance company purchases a catastrophe reinsurance to reduce its exposure to the risks associated with the occurrence of a catastrophic event. It allows the reinsured to shift some or all of the risk associated with such events in the policies that the reinsured has underwritten to the reinsurer. This is typically done in exchange of a portion of the premiums collected by the primary insurer or the reinsured. While catastrophes are rare events, the losses that an insurer would have to cover in case of such an event are extremely high. Therefore, it is important to invest in catastrophe reinsurance to ensure that the insurer’s operating cash flow is not disrupted during such an event. The decision to take such a reinsurance dependence on predictive modelling performed by the insurer’s actuaries to estimate the likelihood of a catastrophe and the losses that may result from the same. Modern catastrophe models can provide location-level estimates, and allow insurers to decide for which set of policies should a reinsurance be taken. The cost of catastrophe reinsurance can be significantly high as the premiums are based on exposure rather than experience. This is because despite the low probability of a catastrophe, the amount of losses resulting from it could be very high. Request Call Back Category * - Select -CarTwo WheelerHealthTravelPersonal Accident Buy Renew Claim submit Related Posts Disclaimer : The information published on this website is for the public's reference only. Content of this information is to provide an overview of your Travel needs and should not be relied upon for personal, medical, legal or financial decisions and you should consult an appropriate professional for specific advice. Bharti AXA General Insurance Company Limited makes no representations about the suitability, reliability, timeliness, and accuracy of the information, travel, services, or any other items mentioned on this subject for any purpose whatsoever.