genforsikring

Genforsikring, also known as reinsurance, is a practice where insurance companies transfer a portion of their risk portfolio to another insurance company, known as a reinsurer. This mechanism allows primary insurers to reduce their exposure to large or catastrophic losses, thereby strengthening their financial stability and capacity to underwrite more policies. By ceding a part of their risk, insurers can manage their capital more effectively and absorb unexpected claims without jeopardizing their solvency.

There are several types of genforsikring. Treaty reinsurance involves the reinsurer automatically accepting a predetermined share of all risks within a specific class or portfolio of the ceding company. This provides ongoing protection. Facultative reinsurance, on the other hand, is negotiated on a case-by-case basis for individual risks that are particularly large or unusual. This allows for more flexibility in covering specific, high-value exposures.

The purpose of genforsikring extends beyond risk mitigation. It also enables insurance companies to increase their underwriting capacity, allowing them to accept larger risks than they could manage on their own. Furthermore, it can provide regulatory relief, as reinsured risks may count differently towards capital requirements. Reinsurers, in turn, profit from the premiums paid by ceding companies and by diversifying their own risk across a broad base of insurance markets globally. This intricate web of risk transfer is fundamental to the stability and growth of the global insurance industry, ensuring that even the largest potential claims can be managed.