Which department helps protect insurance companies from catastrophic losses?

The Reinsurance Department is responsible for helping insurance companies mitigate the risk of catastrophic losses through the process of reinsurance. Reinsurance involves one insurance company purchasing insurance from another to reduce the likelihood of having to pay a large claim. By shifting a portion of their risk to reinsurers, primary insurers are better positioned to manage their exposure during instances of high loss, such as natural disasters or other events that can result in several claims at once.

This department plays a crucial role in maintaining the financial stability of insurance companies by ensuring they have a safety net in place for significant losses. By engaging in reinsurance agreements, insurers can operate with greater confidence and resilience in the face of unforeseen, large-scale events, allowing them to protect policyholders effectively while maintaining an overall sound financial footing.