Jälleenvakuutus

Jälleenvakuutus, often translated as reinsurance, is a mechanism by which insurance companies transfer a portion of their risks to other insurance companies. This process is primarily used by primary insurers to protect themselves against large losses, increase their underwriting capacity, and stabilize their earnings. By ceding a portion of their risk, primary insurers can take on larger or more complex policies than they might otherwise be able to handle on their own.

There are several types of reinsurance agreements. Treaty reinsurance involves the reinsurer agreeing to accept a predetermined portion of all risks within a specific class of business for a set period. Facultative reinsurance, on the other hand, is negotiated on a risk-by-risk basis, allowing the primary insurer to seek reinsurance for individual, unique, or particularly large exposures.

Reinsurance plays a crucial role in the stability of the insurance industry. It allows insurers to spread their exposure to catastrophic events like natural disasters or widespread liability claims. Without reinsurance, the financial impact of such events could be devastating for individual insurance companies, potentially leading to insolvencies. Reinsurers themselves are often specialized companies that operate on a global scale, leveraging diversification across different markets and lines of business to manage their own risks effectively. The practice of jälleenvakuutus is therefore a fundamental component of modern risk management within the financial sector.