Viszontbiztosítási

Viszontbiztosítási, a Hungarian term, translates to reinsurance in English. Reinsurance is a form of insurance where one insurance company (the ceding company or cedent) transfers a portion of its risk portfolio to another insurance company (the reinsurer). This practice is primarily undertaken by insurance companies to reduce their exposure to large losses, stabilize their earnings, and increase their underwriting capacity.

There are several types of reinsurance arrangements. Proportional reinsurance, also known as pro rata reinsurance, involves the reinsurer sharing a predetermined percentage of both the premiums and the losses of the ceding company. Non-proportional reinsurance, or excess of loss reinsurance, involves the reinsurer covering losses that exceed a certain threshold, the retention level of the ceding company. Facultative reinsurance is negotiated on a case-by-case basis for individual risks, while treaty reinsurance covers a specified book of business or class of risks for a defined period.

The purpose of reinsurance is multifaceted. It allows primary insurers to underwrite larger policies than they could comfortably manage on their own, thereby expanding their market reach. It also provides financial protection against catastrophic events, such as natural disasters, which could otherwise bankrupt an insurer. Furthermore, reinsurance can help insurers manage their capital more efficiently by reducing the amount of capital they need to hold against potential claims. The global reinsurance market plays a crucial role in the stability and capacity of the entire insurance industry.