retrocessionaire: a reinsurer who assumes risk from another reinsurer

Welcome to Obscure Technical Term Week here at Maybe Tomorrow–Probably Not. Today’s word comes from the wonderful (read “horrifying”) world (read “tiny but incredibly powerful market niche”) of reinsurance (read “voodoo”). I don’t pretend to know all that much about reinsurance, primarily because I’m afraid my eyeballs will explode and leak gracelessly out of their sockets if I read too much about it, but the principle is essentially this:

1.) Insurance companies contract with their clients to assume part of the risk of various ventures and life events.
2.) These insurance companies in turn hedge their bets and create a safety net beneath them by selling their risk on to other companies, called “reinsurers.”
3.) Reinsurers pass risk along to other reinsurers, to create vast redundancies that spread the risk through the market, thus ensuring (ha ha) that in the event of a massive disaster, natural or man-made, no single insurance company is left holding the bag.

Reinsurance is actually an incredibly good idea for societies that have decided that commercial insurance is morally acceptable, because without it, when one big insurance company collapses under the weight of claims brought for a Katrina or, god forbid, a tsunami-level catastrophe, not only do all that company’s policyholders get screwed, but macro-economic shockwaves then roil the insurance industry (and by extension, the global economy). Reinsurance makes sure everybody gets fucked a little, rather than everybody getting fucked a lot.

This doesn’t mean that reinsurance isn’t mind-numbingly boring or mind-numbingly complicated — believe me, it’s both. I’ve been working on a reinsurance-related case here at Bozack & Dingdong LLP recently, and I have no hesitation in averring that the only interesting thing about reinsurance is the graceful and lovely word “retrocessionaire.” It is so rare as not to be listed in Merriam-Webster Unabridged, and it’s a peculiar amalgam of pieces: a retrocession is the hyper-Latinate (from retro-, back, + cedere, to go, yield, withdraw, etc.) result of retroceding something — assigning risk back along the chain of reinsurance to another company — but the French suffix -aire seems to come out of left field. It gives a soft landing place to the crisp consonants and soothing sibilants at the beginning of the word, providing an oasis of aesthetics in a desert of actuarial precision.

The opposite of a retrocessionaire is a “retrocedant,” one who retrocedes one’s risk, and somehow I think the word’s bland, technical, formalistic nature suits the shame and dishonor that must come with admitting you don’t have the sack to keep all that risk for yourself, you big puss. No, the elegant title goes to the courageous, manly company that seizes the risk — carpe periculum! — and raises it as its own, helping out a sissy little bitch in need. RETROCESSIONAIRE, WHAT!