DEFINITION of 'Clash Reinsurance'
A type of reinsurance that provides additional coverage to the insurance company in the event that one casualty loss event results in two or more claims from insured policy holders. Clash reinsurance is purchased by companies for their own security. It reduces the potential maximum loss on either a single risk or a large number of risks.
BREAKING DOWN 'Clash Reinsurance'
Clash reinsurance extends the coverage from normal reinsurance recoveries when the insurance company is faced with two or more claims from multiple insureds following a catastrophic event, such as a hurricane, flood, fire or earthquake.
The clash insurance is intended to protect the insurer when multiple claims arise from out of the ordinary events and allows insurance companies to share large risks with other companies.