Transfer Of Risk
Barron's Insurance Dictionary:
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Risk Transfer
Shifting a pure risk by means of a two party contract such as insurance.
| Risk Selection, Risk Retention Act of 1986, Risk Rating, Individual | |
| Risk and Insurance Management Society (RIMS), Risk and Occupation, Risk-Based Capital |
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Transfer Of Risk
Investopedia Financial Dictionary:
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Transfer Of Risk
The underlying tenet behind insurance transactions. The purpose of this action is to take a specific risk, which is detailed in the insurance contract, and pass it from one party who does not wish to have this risk (the insured) to a party who is willing to take on the risk for a fee, or premium (the insurer).
Investopedia Says:
For example, whenever someone purchases home insurance, he or she is essentially paying an insurance company to take the risk involved with owning a home. In the event that something does happen to the house, such as property damage from a fire or natural disaster, the insurance company will be responsible for dealing with any resulting consequences.
In today's financial marketplace, insurance instruments have grown more and more intricate and complex, but the transfer of risk is the one requirement that is always met in any insurance contract.
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Barron's Insurance Dictionary
Dictionary of Insurance Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved.
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Mentioned in
Cede
(insurance term)
Guaranteed Cost (Traditional) Insurance Program
(insurance term)
Allocated Transfer Risk Reserve (ATRR)
(in banking)
Noninsurance Transfer
(insurance term)
Finite Risk Insurance
(finance term)
» More