Nowadays, the share of claims by insurance company is really important. Reinsurance is insurance that is purchased by an insurance company (reinsurer) from another insurance company (insurer) as a means of risk management , to transfer risk from the insurer to the reinsurer.
With reinsurance, the insurer can issue policies with higher limits than it would otherwise be allowed, therefore being permitted to take on more risk because some of that risk is now transferred to the reinsurer. Reinsurance can help to make an insurance company’s results more predictable by absorbing larger losses and reducing the amount of capital needed to provide coverage .
There are two basic kind of reinsurance: technical and formic classifying. In technical one there are Proportional Reinsurance and disproportional Reinsurance. In the second classifying, there are Facultative reinsurance and obligatory Reinsurance. In spite of legal and economical advantages of reinsurance, insurer doesn’t want to conclude the agreement.
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