Do Insurers in Catastrophe-Prone Regions Buy Enough Reinsurance?

Alejandro Drexler () and Florentine M. Eloundou Nekoul

Chicago Fed Letter, 2016, No 360

Abstract: To protect themselves from catastrophic losses, insurance companies buy insurance, in the same way that people do. These contracts are called reinsurance agreements, and come in two main forms: proportional and nonproportional contracts. In proportional reinsurance contracts, a reinsurer agrees to repay a fixed proportion of losses incurred by the primary insurer. The simplicity of the agreement makes these types of contracts inexpensive and easy to administer. Therefore, they can be ideal risk-management tools for small insurance companies.

Keywords: Insurance; Property casualty (search for similar items in EconPapers)
Date: 2016
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