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🏊 '''Pool reinsurance''' is an arrangement in which multiple [[Definition:Insurance carrier | insurers]] or [[Definition:Reinsurer | reinsurers]] collectively share risks that would be too large, volatile, or unpredictable for any single entity to absorb alone. Rather than one [[Definition:Reinsurer | reinsurer]] assuming a [[Definition:Cession | cession]] in its entirety, participating members contribute to a common pool and divide both the [[Definition:Premium | premiums]] and [[Definition:Loss | losses]] according to predetermined shares. These pools often form around catastrophic or hard-to-model exposures such as [[Definition:Terrorism insurance | terrorism risk]], [[Definition:Nuclear insurance | nuclear liability]], or [[Definition:Flood insurance | flood coverage]], where private-market capacity may be scarce or prohibitively expensive.

⚙️ Each member of the pool agrees to accept a defined percentage of every risk that enters the arrangement. A central administrator — sometimes a government body, sometimes an industry-created entity — handles [[Definition:Underwriting | underwriting]], [[Definition:Claims management | claims management]], and the allocation of results back to participants. For example, national terrorism pools like Pool Re in the United Kingdom or [[Definition:Terrorism Risk Insurance Act (TRIA) | TRIA]]-backstopped programs in the United States operate on this principle, allowing [[Definition:Primary insurer | primary insurers]] to offer coverage they could not sustain independently. The pool's governing agreement spells out contribution formulas, [[Definition:Retention | retention]] thresholds, and the mechanism by which surplus or deficit is distributed at the end of each accounting period.

💡 Without pool reinsurance, entire categories of risk could become effectively uninsurable, leaving businesses and governments exposed. By spreading catastrophic or systemic exposures across many balance sheets, pools stabilize the broader [[Definition:Insurance market | insurance market]] and ensure continuity of coverage even after major [[Definition:Loss event | loss events]]. They also give smaller carriers access to lines of business that would otherwise require capital reserves beyond their reach, fostering competition and broader market participation.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Catastrophe reinsurance]]
* [[Definition:Reinsurance pool]]
* [[Definition:Risk sharing]]
* [[Definition:Terrorism Risk Insurance Act (TRIA)]]
* [[Definition:Quota share reinsurance]]
* [[Definition:Government-backed insurance program]]
{{Div col end}}

Definition:Pool reinsurance - Revision history

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