Sometimes a comic strip can add to both your knowledge and vocabulary.
I had previously heard of reinsurance but not the next level of retrocession,
as is shown above.
Dave Kellett’s Sheldon comic on July 15, 2026 has the
following dialogue:
Arthur (the talking duck): You buy insurance.
Arthur: But then the insurance company buys
‘Re-insurance’
on your insurance.
As insurance.
Arthur: But then that reinsurer needs
their own
insurance!
So they buy ‘retrocession,’ which is
insurance
for reinsurers of insurance.
Gramp: Dear God. It’s
insurance all the way down.
[An infinite regress.]
Arthur: And the
secret? NOT A SINGLE ONE OF THOSE
POLICIES PAYS
OUT WHEN NEEDED.
The Wikipedia page on Reinsurance says it is:
“…the transfer of liability from the insurance company,
which issued the insurance contract, to the reinsurance company. The
reinsurance company assumes some of an insurance company's liability in
exchange for a payment or a portion of the insurance contract costs.”
Munich Reinsurance, known as Munich Re is one example, and
Swiss Re is another. Munich Re used to post an interesting quarterly magazine
called Schadenspiegel (about losses and loss prevention) on their web site. Later
they restricted it just to their customers. You can find their 2007 Special
feature issue – Risk factor of earth as a 58-page pdf.
Lloyd’s of London is another somewhat different reinsurer.
The Wikipedia page about them says:
“Lloyd's of London, generally known simply as Lloyd's,
is an insurance and reinsurance market located in London, England. Unlike most
of its competitors in the industry, it is not an insurance company; rather,
Lloyd's is a corporate body governed by the Lloyd's Act 1871 and subsequent
acts of Parliament. It operates as a partially-mutualised marketplace within
which multiple financial backers, grouped in syndicates, come together to pool
and spread risk. These underwriters or ‘members,’ include both corporations and
private individuals, the latter being traditionally known as ‘Names’.”
There is an article by Ramon Berenguer at Reinsurance News
on August 20, 2025 titled How does retrocession in reinsurance work? He says that:
“Retrocession is a reinsurance transaction where a reinsurer
transfers risks of an insurance company it has reinsured to another reinsurer.
The reinsurance company that takes on another reinsurer’s risk is called the
retrocessionaire.”
How did I learn about Munich Reinsurance? Back in 1964 Munich
Re published two books (of text and plates [images]) with failure analysis case
histories by E. J. Pohl titled The Face of Metallic Fractures. They were
subtitled Results of Investigations on Failed Engineering Components Carried
Out by the Engineering Insurance Department of the Allianz
Versicherungs-Aktiengesellschaft.
In 1990 I was working in Columbus, Ohio doing consulting which
included lots of failure analysis. I bought the 1988 Fatigue Design Handbook from the Society of Automotive Engineers (SAE). On pages 297 to 330 there was Chapter
11 on Failure Analysis by David Broek which referred to E. J. Pohl’s book. Munich
Re had a U.S. office in downtown Columbus, so I visited them and asked the
manager whether I could buy a copy of that book. He said no, it was long out of
print. But then he asked around that company, found a spare copy at another
office, and mailed it to me as a Christmas present!
