What Is the Associate in Reinsurance (ARe) Designation?
The Associate in Reinsurance (ARe) is a professional certification in the insurance industry, which emphasizes the skills and knowledge relevant to the reinsurance sector. It is conferred by The Institutes, an organization dedicated to providing accreditation and continuing education to insurance professionals.
Key Takeaways
- The ARe is a professional designation used in the reinsurance sector.
- To obtain it, candidates must take a series of self-taught courses and exams.
- The topics covered in the ARe program include the regulation of the reinsurance industry, industry best practices, and financial accounting, among others.
How the ARe Designation Works
As its name suggests, the ARe is focused on professionals working on the reinsurance sector, which is the segment of the insurance industry dedicated to managing the risks faced by insurance companies themselves. When an insurer wishes to hedge against some of the liabilities they have already incurred, they can offload some of that risk to another insurance company by purchasing reinsurance. In that scenario, the insurer purchasing reinsurance will cede some of the premiums they receive from the insurance holder. In exchange, the reinsurer will assume responsibility for some portion of the risk being insured.
Professionals working in this sector must have a detailed knowledge of the risks faced by insurance companies and the methods used to protect against them. For example, companies purchasing reinsurance must consider the appropriate level of premiums to concede as well as what percentage of their overall risk exposure they wish to hedge against. Ultimately, the profitability of any insurer will depend on these types of pricing and risk management decisions. The ARe designation exists to prepare insurance professionals to operate in this field and perform critical tasks such as interpreting, drafting, and modifying reinsurance contracts.
Candidates who wish to obtain the ARe designation must take a series of exams that cover different aspects of reinsurance contracts and the reinsurance industry. The designation is recommended for reinsurers, claims adjusters, policy underwriters, and financial professionals that may work with reinsurance treaties. To prepare for the exams, candidates take a series of self-taught courses using materials purchased from The Institutes. Depending on the region, instructor-led courses may also be available.
Real World Example of the ARe Designation
The ARe’s course materials are divided into four foundational courses, one elective course, and one exam concerning professional ethics. The Foundation courses include fundamentals of personal and commercial insurances, reinsurance principles and best practices, contemporary issues facing the reinsurance industry, and insurance company operations. The elective courses include finance and accounting, risk financing, and insurance regulation.
Typically, it takes candidates between 12 and 18 months to complete the required courses. Thankfully, many of the courses involved can also be used to obtain other insurance-industry designations such as the Chartered Property Casualty Underwriter (CPCU), Associate in Risk Management (ARM), and Associate in Insurance Accounting and Finance (AIAF). Credit may also be earned toward the Associate in Insurance Services (AIS) and Associate in General Insurance (AINS) designations.
FAQs
Create effective reinsurance programs that protect insurers from risk and empower them to better serve their customers by understanding how insurers and reinsurers collaborate.
What is reinsurance with an example? ›
Reinsurance is a way for insurers to transfer risk to other parties to reduce the likelihood of having to pay a large claim in the future. An insurance company, for example, may sell home insurance covering many households in one area.
How does the reinsurance work? ›
Issue: Reinsurance, often referred to as “insurance for insurance companies,” is a contract between a reinsurer and an insurer. In this contract, the insurance company—the cedent—transfers risk to the reinsurance company, and the latter assumes all or part of one or more insurance policies issued by the cedent.
Is reinsurance a good career? ›
Reinsurance companies are global entities. They offer good careers and – more importantly – they offer an excellent quality of life. Compared to investment banking now, the compensation on offer at reinsurers is not particularly low and you will actually get to spend evenings and weekends with your family.
Can you make good money in reinsurance? ›
How much does a Reinsurance make? As of Jun 5, 2024, the average annual pay for a Reinsurance in the United States is $86,750 a year. Just in case you need a simple salary calculator, that works out to be approximately $41.71 an hour. This is the equivalent of $1,668/week or $7,229/month.
What are 4 reasons for reinsurance? ›
Insurers purchase reinsurance for four reasons: To limit liability on a specific risk, to stabilize loss experience, to protect themselves and the insured against catastrophes, and to increase their capacity.
What is reinsurance for dummies? ›
Reinsuranceisaneffectivemeansof mitigatingtheeffectsofdisasterswhich mightbetoosevereforaninsurerto absorborsimplyuneconomicforthe insurertocoverwithitsowncapital. Havingreinsurancecontractsinplace meansinsurerscanshieldtheircapital basea*gainstsuchpeakexposures.
Who is the largest reinsurance company? ›
Is it a good idea to be a reinsurance? ›
Reinsurance reduces the net liability on individual risks and catastrophe protection from large or multiple losses. The practice also provides ceding companies, those that seek reinsurance, the chance to increase their underwriting capabilities in number and size of risks.
What are the three main methods of reinsurance? ›
Three reinsurance methods are usual: Treaty Reinsurance, Facultative Reinsurance and a hybrid mode with elements from the Treaty and the Facultative. This is the most common cession method within the reinsurance market.
Definition: Reinsurance risk refers to the inability of the ceding company or the primary insurer to obtain insurance from a reinsurer at the right time and at an appropriate cost. The inability may emanate from a variety of reasons like unfavourable market conditions, etc.
What is reinsurance example? ›
For example, an insurance company might insure commercial property risks with policy limits up to $10 million, and then buy per risk reinsurance of $5 million in excess of $5 million. In this case a loss of $6 million on that policy will result in the recovery of $1 million from the reinsurer.
How to start a career in reinsurance? ›
The baseline requirement for becoming a reinsurance analyst is to obtain a bachelor's degree in business fields, such as finance, economics, business management, or accounting, It is particularly advantageous to study a business-related field that involves heavy mathematics.
What are the disadvantages of reinsurance? ›
Disadvantages of Reinsurance:
- Can be expensive, as reinsurers charge a premium for assuming a portion of the insurer's risk.
- This may result in a loss of control for the insurer, as they are relying on the reinsurer to manage a portion of their risk.
Reinsurance, or insurance for insurers, transfers risk to another company to reduce the likelihood of large payouts for a claim. Reinsurance allows insurers to remain solvent by recovering all or part of a payout. Companies that seek reinsurance are called ceding companies.
Do reinsurance actuaries make more money? ›
San Jose, CA beats the national average by $14,750 (13.8%), and San Francisco, CA furthers that trend with another $22,131 (20.7%) above the $107,173 average.
What does a reinsurance agent do? ›
A reinsurance broker is an intermediary individual or firm who is paid a fee or commission to find and place new business on behalf of both the insured client and insurer. This can involve negotiating rates or contracts while sourcing the best-suited policies on the market.
What is the job of reinsurance officer? ›
The position is responsible for documentation of reinsurance premiums and claims recoveries, maintenance of facultative and co-insurance premiums and claims records, processing and verification of outward and inward facultative reinsurance business, basic accounting activities including facultative reinsurance ...
