Blended Covers
Categories: Insurance
Ever wonder how insurance companies cover their own derrieres? The answer is blanket covers, a type of “reinsurance.”
Reinsurance is insurance for insurance companies, typically bought from other insurance companies. Basically, insurance companies can take on more risk if they spread out their own risk to other insurance companies.
Okay, back to blanket covers. Reinsurance used to be very specific, and would only last a year or so. Blanket covers is reinsurance 2.0, and their advent made it so that the one-year contracts were now multi-year contracts that covered a wider array of things.
This way, insurance companies didn’t have to renegotiate reinsurance every year, and it gave them a more holistic form of reinsurance.
At the end of the day, blended covers help insurance companies offload some of their risk. Because insurance is risky business, folks.