Insurance companies face financial risks, just like any other business. One way they protect themselves is through reinsurance—a method of transferring part of their risk to another insurer. Non-proportional reinsurance, in particular, is a vital tool that safeguards insurers from catastrophic losses.

At Riseson Insurance , we’re here to explain how this concept works and why it’s important. Whether you're in Tempe , Phoenix , Scottsdale , Tucson , Gilbert , or Chandler , understanding the nuances of reinsurance can help you appreciate the layers of protection in the insurance industry.

Non-proportional reinsurance shifts the financial burden of large claims to a reinsurer after a certain threshold, known as the priority or retention limit, is met. Unlike proportional reinsurance , where risks and premiums are shared proportionally, non-proportional reinsurance only kicks in when losses exceed the pre-agreed limit.

Two common types include:

Excess of Loss Reinsurance: Covers claims that surpass a specific amount. Stop-Loss Reinsurance: Provides protection when an insurer's total claims exceed a set percentage of premiums collected.

This type of reinsurance protects insurers from catastrophic events like natural disasters or significant liability claims, ensuring they remain financially stable and can continue serving policyholders.

Benefits include:

Financial Security : Limits the impact of large claims on the insurer's reserves. Operational Stability: Allows insurers to focus on providing quality service without fear of insolvency. Risk Management : Offers tailored solutions for high-risk industries or regions prone to severe weather.

While non-proportional reinsurance is behind-the-scenes protection for insurers, it ultimately benefits individuals and businesses. At Riseson Insurance , we take pride in serving Tempe, Phoenix, Scottsdale, Tucson, Gilbert, and Chandler. Our commitment to transparency ensures you receive the coverage you need without hidden complexities.

Whether you're curious about the mechanics of reinsurance or need advice on your personal or business coverage, we’re here to help. Reach out to Riseson Insurance in Tempe to get a quote. Visit Risesoninsurance.com or call 602-460-5470 today! Let us safeguard your future, one policy at a time.

What Is Non-Proportional Reinsurance?

Why Is Non-Proportional Reinsurance Important?

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• Excess of Loss Reinsurance: Covers claims that surpass a specific amount.
• Stop-Loss Reinsurance: Provides protection when an insurer's total claims exceed a set percentage of premiums collected.

• Financial Security : Limits the impact of large claims on the insurer's reserves.
• Operational Stability: Allows insurers to focus on providing quality service without fear of insolvency.
• Risk Management : Offers tailored solutions for high-risk industries or regions prone to severe weather.