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From: wetcw@pyuxa.UUCP
Newsgroups: net.legal
Subject: Re: Insurance companies question
Message-ID: <500@pyuxa.UUCP>
Date: Tue, 17-Jan-84 13:57:52 EST
Article-I.D.: pyuxa.500
Posted: Tue Jan 17 13:57:52 1984
Date-Received: Wed, 18-Jan-84 07:27:22 EST
References: <488@hou5a.UUCP>
Organization: Central Services Org., Piscataway N.J.
Lines: 14

Insurance companies normally sell large policies to other insurance
companies.  That is, say you have a policy for 1 million on whatever.
The company will sell the policy, in parts and pieces, to other companies.
They spread the risk around.  They might sell one tenth each to nine other
companies, keeping one tenth.  Thus, if a claim comes in on the policy, each
is only liable for one tenth the full amount, thereby spreading the bite
around.  This is done in many cases where there is some type of liability
attached.  Mortgages, large loans, car loans, and many consumer credit
situations are bought and sold in the marketplace.  It all helps to reduce
the chance of one company carrying too great a burden in case of default
or claim.

		T. C. Wheeler