EDIT: Yes, there is something called Reinsurance.
Reinsurance is a means by which an insurance company can protect itself with other insurance companies against the risk of losses.
What about them going down. there’s something for that too.
Reinsurance companies themselves also purchase reinsurance and this is known as a Retrocession. LOL 😀
so then, there is a way they can all go down at once? Nah.. they are covered. They usually have a clause in the agreements to limit there risk of catastrophically large losses.
Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 percent.
do private Insurance firms have Bankruptcy Insurance ?
Isn’t it very important?
guarantee from the Govt. is one thing I can imagine. public companies have it easy. what about private companies?
do they pay a premium too, then, to the Govt. for bankruptcy insurance?
and is there a cap on the insurance to the sum insured ? [like I think ther’s a Rs 1 lac cap on insurance of SB accounts for centralized banks?]
(Cheers to KP, for initiating the discussion)
on a different note, can the govt arbitrarily move funds (derived from taxes) wherever they care to? hmm…