Dr. Joshua Safeek on Insurance and Reinsurance
Dr. Joshua Safeek understands that the terms insurance and reinsurance are often confused. As a professional who has worked in the insurance industry for more than ten years, he is well equipped to explain the similarities and differences between these two financial protection systems.
The concept of insurance and reinsurance is alike, in that the goal is to protect a person or business from financial hardship due to loss. However, insurance is the protection offered to the individual or business, where reinsurance is the protection given to the insurance company.
A business or individual purchases insurance in the form of a contract. That contract allows for protection or reimbursement against a loss, such as a loss of property, life, a home, automobiles, or any other item that is insured. The person seeking the insurance must pay a premium, a fee to the insurance company for their services. If the worst happens, and there is a loss, the insurance company will then reimburse the policy holder for all or a portion of their total loss.
Reinsurance is the method insurance companies use to soften their own risk in doing business. Consider an area that is prone to natural disasters, if one strikes there could be a significant number of claims at once which may cripple the financial abilities of the insurance company. By taking insurance of their own, through reinsurance, they are protecting themselves and their many clients. Dr. Joshua Safeek says that some reinsurance policies are global.