How Do You Spell AUTOMATIC REINSURANCE?

1. Automatic reinsurance is a contractual agreement in the insurance industry whereby a primary insurance company transfers a predetermined portion or all of its risk exposure to a reinsurer without the need for individual negotiations. This type of reinsurance is typically pre-approved, in which the reinsurer agrees to assume a certain percentage or specified amount of the primary insurer's policies automatically, based on predetermined conditions and parameters.

   Under the automatic reinsurance arrangement, the ceding insurer provides regular updates to the reinsurer regarding its portfolio, including policy counts and related data. The reinsurer, in turn, employs pre-determined formulas or calculations to determine the amount and extent of risk that it will assume. The automatic arrangement simplifies the process for insurers and reinsurers as it eliminates the need for case-by-case negotiations for each individual policy.

   Automatic reinsurance provides several benefits for the primary insurer. It enables the insurer to transfer part of its risk to the reinsurer, thereby reducing its potential exposure and ensuring financial stability. It also offers more predictability and consistency to insurers by providing a stable and predetermined reinsurance capacity for specific classes of risk. Moreover, it saves time and resources as the automatic process eliminates the need for continuous negotiations and approvals. As for reinsurers, automatic reinsurance allows them to expand their portfolios and generate a stable stream of premium income.

The word "automatic" is derived from the Greek word "automatos", which means "self-moving" or "self-acting". It later entered the Latin language as "automaticus" with a similar meaning. In English, "automatic" refers to a process or mechanism that operates independently or without conscious control.

The word "reinsurance" combines the prefix "re-" (which indicates repetition or again) and "insurance", which comes from the Latin word "securus", meaning secure or safe. "Reinsurance" refers to the process of insurers insuring themselves by obtaining insurance coverage from another company for their own policies.

Therefore, "automatic reinsurance" refers to a type of reinsurance process that operates independently or automatically without the need for manual intervention. It suggests that the reinsurance coverage is triggered automatically based on predefined conditions or mechanisms, without requiring insurers to take deliberate actions.

Idioms with the word AUTOMATIC REINSURANCE