Term Life Insurance Articles
What Is An Accredited Reinsurer?
2009-10-16
An accredited reinsurer is not an authorized insurer. By definition, it is a company that isn't domiciled or authorized to do business in a state, but may continue to transact business on an excess line basis, in accordance with requirements for the state in which they work. Accredited reinsurers are insurers: the only difference is that though they may be unauthorized to insure in said state of business, they are authorized to do business as a third party. They also have a separate set of requirements that vary by state. These requirements include but are not limited to filing formal acknowledgment to the state Insurance Board; providing evidence that they are licensed; submitting their records to financial examinations by the state they are licensed in; and to file annual financial statements. More regulations must be met as well.
Another definition widely held by many insurance sites including www.canadalife.com is: "A reinsurer that is not licensed in a state but demonstrates that it meets the financial conditions of the state, is licensed in at least one state, and submits to the state and allows its books and records to be examined is considered an accredited reinsurer. A direct writing insurance company will receive full statutory reserve credit for reserves ceded to an accredited reinsurer." Of course, these definitions vary by state. Respective state Insurance Board websites will have more information.
In laymen's terms, an accredited reinsurer is a third party insurer that many insurance companies use to transfer their high risk or at risk accounts for a reasonable fee. As is cited at www.harperrisk.com, the benefit for the insurance company is that they immediately see results on their balance sheets in the form of capital as a result of transferring to accredited reinsurers. Life insurance and term life insurance policies are most often ensured coverage by an accredited reinsurer. With advances in pharmaceuticals, healthy living and medical discoveries, the risk isn't as high as it once was for accredited reinsurance companies.
Further, according to an article on Salon.com, many people believe that accredited reinsurance is the key to a highly competitive private healthcare industry. "As the market stands now, current reinsurances are horribly expensive because the costs are effectively hidden from lay administrators". The reason for the expense is because of tenets and underlying political motivations of the reinsurance companies. Utilization and acceptance of these practices do not shield small medical provider groups from catastrophic risks. For all the bad press that HMOs are given, there is a need for them in accredited reinsurance practices as their presence ensures accountability--and with accountability comes reform and progress.
Free Insurance Quotes
An accredited reinsurer is not an authorized insurer. By definition, it is a company that isn't domiciled or authorized to do business in a state, but may continue to transact business on an excess line basis, in accordance with requirements for the state in which they work. Accredited reinsurers are insurers: the only difference is that though they may be unauthorized to insure in said state of business, they are authorized to do business as a third party. They also have a separate set of requirements that vary by state. These requirements include but are not limited to filing formal acknowledgment to the state Insurance Board; providing evidence that they are licensed; submitting their records to financial examinations by the state they are licensed in; and to file annual financial statements. More regulations must be met as well.
Another definition widely held by many insurance sites including www.canadalife.com is: "A reinsurer that is not licensed in a state but demonstrates that it meets the financial conditions of the state, is licensed in at least one state, and submits to the state and allows its books and records to be examined is considered an accredited reinsurer. A direct writing insurance company will receive full statutory reserve credit for reserves ceded to an accredited reinsurer." Of course, these definitions vary by state. Respective state Insurance Board websites will have more information.
In laymen's terms, an accredited reinsurer is a third party insurer that many insurance companies use to transfer their high risk or at risk accounts for a reasonable fee. As is cited at www.harperrisk.com, the benefit for the insurance company is that they immediately see results on their balance sheets in the form of capital as a result of transferring to accredited reinsurers. Life insurance and term life insurance policies are most often ensured coverage by an accredited reinsurer. With advances in pharmaceuticals, healthy living and medical discoveries, the risk isn't as high as it once was for accredited reinsurance companies.
Further, according to an article on Salon.com, many people believe that accredited reinsurance is the key to a highly competitive private healthcare industry. "As the market stands now, current reinsurances are horribly expensive because the costs are effectively hidden from lay administrators". The reason for the expense is because of tenets and underlying political motivations of the reinsurance companies. Utilization and acceptance of these practices do not shield small medical provider groups from catastrophic risks. For all the bad press that HMOs are given, there is a need for them in accredited reinsurance practices as their presence ensures accountability--and with accountability comes reform and progress.
