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Reinsurance Pool

Reinsurance Pool

Definition

A risk financing mechanism used by insurance companies to increase their ability to underwrite specific types of risks. The insurer cedes risk to the pool under a treaty reinsurance agreement. The insurer may be a part owner of the pool and may assume a quota share of the pool risk. A captive reinsurance pool may be owned by the original insureds. Some pools are operated by states to provide capacity for hard-to-place risks.

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