Reinsure
Reinsure is the act or process by which an insurance company transfers a portion of its risk to another insurer, called the reinsurer, in exchange for a premium. The effect is to spread risk, protect the ceding company’s solvency, and stabilize profits by reducing the impact of large or volatile claims. Reinsurance does not eliminate risk; it reallocates it and provides additional capacity for underwriting.
There are two primary forms of reinsurance: treaty and facultative. Treaty reinsurance covers a specified class
Key participants include the ceding insurer, the reinsurer, and sometimes additional entities such as retrocessionaires that
Overall, reinsure is a fundamental risk-management tool in the insurance industry, enabling insurers to absorb larger