by Kaitie Reis
Though the term “insurance” is one that is familiar to most, the concept of “reinsurance” is where some individuals become lost. However, College of Business alumnus Doug Johnson summarizes the term for those outside of the industry to learn.
By comparing it to a typical homeowner’s insurance policy, he says that purchasing this policy is similar to purchasing a promise from the insurance company to repair your home if it’s damaged. However, if too many things happen in the same year, the company may not have enough to cover the costs, which is where reinsurance comes in.
“Insurance companies purchase insurance policies from reinsurance companies like Munich Re to protect them from an overabundance of claims payments. Just as you pay your home insurance company a small premium to protect you from a large loss, insurance companies pay Munich Re a premium to help them pay their large claims,” says Johnson.
Johnson, a Risk Analyst for Munich Re America, is part of a two and a half year training and development program that will prepare him for a future role as an underwriter. As an underwriter, he will be responsible for analyzing the risk associated with insurance or reinsurance policies and negotiating the terms, conditions and price for the policy.