A company who provides their own health insurance will purchase reinsurance from another insurance company to protect themselves from any catastrophic losses. The reinsurance sets a stop loss measure that limits the amount the company will pay for claims.

Question

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Reinsurance is a practice where insurance companies purchase insurance policies from other insurers to limit their own risk of catastrophic losses. The stop loss measure is a form of reinsurance that sets a threshold, beyond which the reinsurer will cover the excess claims, thus protecting the original insurer (in this case, the company providing its own health insurance) from significant financial impact.

A Company Who Provides Their Own Health Insurance Will Purchase