This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Reinsurance" – news · newspapers · books · scholar · JSTOR(November 2010) (Learn how and when to remove this message)
Part of a series on
Financial markets
Public market
Exchange · Securities
Bond market
Bond valuation
Corporate bond
Fixed income
Government bond
High-yield debt
Municipal bond
Securitization
Stock market
Common stock
Preferred stock
Registered share
Stock
Stock certificate
Stock exchange
Other markets
Derivatives
(Credit derivative
Futures exchange
Hybrid security)
Foreign exchange
(Currency
Exchange rate)
Commodity
Money
Real estate
Reinsurance
Over-the-counter (off-exchange)
Forwards
Options
Spot market
Swaps
Trading
Participants
Regulation
Clearing
Related areas
Banks and banking
Finance
corporate
personal
public
v
t
e
Reinsurance is insurance that an insurance company purchases from another insurance company to insulate itself (at least in part) from the risk of a major claims event.[1] With reinsurance, the company passes on ("cedes") some part of its own insurance liabilities to the other insurance company. The company that purchases the reinsurance policy is referred to as the "ceding company" or "cedent".[2] The company issuing the reinsurance policy is referred to as the "reinsurer". In the classic case, reinsurance allows insurance companies to remain solvent after major claims events, such as major disasters like hurricanes or wildfires. In addition to its basic role in risk management, reinsurance is sometimes used to reduce the ceding company's capital requirements, or for tax mitigation or other purposes.[1]
The reinsurer may be either a specialist reinsurance company, which only undertakes reinsurance business, or another insurance company. Insurance companies that accept reinsurance refer to the business as "assumed reinsurance".[3]
There are two basic methods of reinsurance:
Facultative Reinsurance, which is negotiated separately for each insurance policy that is reinsured. Facultative reinsurance is normally purchased by ceding companies for individual risks not covered, or insufficiently covered, by their reinsurance treaties, for amounts in excess of the monetary limits of their reinsurance treaties and for unusual risks. Underwriting expenses, and in particular personnel costs, are higher for such business because each risk is individually underwritten and administered. However, as they can separately evaluate each risk reinsured, the reinsurer's underwriter can price the contract more accurately to reflect the risks involved. Ultimately, a facultative certificate is issued by the reinsurance company to the ceding company reinsuring that one policy, and is used for high-value or hazardous risks.[4]
Treaty Reinsurance means that the ceding company and the reinsurer negotiate and execute a reinsurance contract under which the reinsurer covers the specified share of all the insurance policies issued by the ceding company which come within the scope of that contract. The reinsurance contract may obligate the reinsurer to accept reinsurance of all contracts within the scope (known as "obligatory" reinsurance), or it may allow the insurer to choose which risks it wants to cede, with the reinsurer obligated to accept such risks (known as "facultative-obligatory" or "fac oblig" reinsurance). These types of contracts are typically annual.[4]
There are two main types of treaty reinsurance, 'proportional and non-proportional, which are detailed below. Under proportional reinsurance, the reinsurer's share of the risk is defined for each separate policy, while under non-proportional reinsurance the reinsurer's liability is based on the aggregate claims incurred by the ceding office. In the past 30 years there has been a major shift from proportional to non-proportional reinsurance in the property and casualty fields.
^ ab"Reinsurance". Insurance Information Institute. 2014-01-12. Retrieved 2022-06-06.
^Kagan, Julia (August 18, 2023). "Cedent: Overview and Examples in Insurance". Investopedia.
^"What is Assumption Reinsurance? - Definition". Insuranceopedia. 9 June 2023. Retrieved 2022-06-06.
^ abMoorcraft, Bethan (Jun 3, 2019). "Facultative and treaty reinsurance: What's the difference?". Insurance Business America. Retrieved 2022-06-06.
the reinsurance policy is referred to as the "ceding company" or "cedent". The company issuing the reinsurance policy is referred to as the "reinsurer"....
the sole nationalised reinsurance company in the Indian insurance market until the insurance market was open to foreign reinsurance players by late 2016...
Financial reinsurance (or fin re) is a form of reinsurance which is focused more on capital management than on risk transfer. In the non-life insurance...
Reinsurance Group of America, Incorporated (NYSE: RGA) is a holding company for a global life and health reinsurance entity based in Greater St. Louis...
which is a statutory body regulating and promoting the insurance and reinsurance industries in India.There are three types of Insurance Companies in India...
Ltd is a Swiss reinsurance company founded in 1863 and headquartered in Zürich, Switzerland. It is one of the world's largest reinsurers, as measured by...
Wikisource has original text related to this article: Reinsurance Treaty The Reinsurance Treaty was a diplomatic agreement between the German Empire and...
supported by leading Reinsurers and underwrites all types of risks in protection, savings, medical insurance, general insurance and reinsurance and goes the extra...
5%). Munich Reinsurance America American Modern Insurance Group Hartford Steam Boiler Inspection and Insurance Company Munich Reinsurance Trading LLC...
AG MSIG Insurance Vietnam Company Limited MS Frontier Reinsurance Ltd. Mitsui Sumitomo Reinsurance Ltd. Mitsui Sumitomo Insurance London Management Ltd...
"specialty" coverage on a primary and reinsurance basis, including products for accident & health, casualty treaty reinsurance, contingency, property open market...
Assumption reinsurance is a form of reinsurance whereby the reinsurer is substituted for the ceding insurer and becomes directly liable for policy claims...
(Reinsurance Division): Talanx subsidiary Hannover Re (German Hannover Rück), with a gross premium of around €22.6 billion, is a European reinsurance group...
shareholders' equity of $34.494 billion. The company was founded in 1872 as a reinsurance company under the name of "Versicherungs-Verein" and at the request of...
2019. "Chris McKeown, the founder of Bermuda reinsurers CIG Reinsurance Ltd. and New Castle Reinsurance Co., has been named chief executive officer of...
acquired Nationale Borg, Nationale Borg Reinsurance and AmTrust Insurance Spain, which are credit and surety reinsurance subsidiaries of AmTrust Financial Services...
employers to protect against unexpected losses. Financial reinsurance is a form of reinsurance that is primarily used for capital management rather than...
provider of reinsurance, insurance and other related business services. The company operates in reinsurance, insurance and ventures. Reinsurance includes...
the reinsurance market under the name "quota-share reinsurance." In such an agreement, a re/insurer agrees to cede to the quota-share reinsurer a percentage...
Reinsurance Corporation Limited commonly referred to as Kenya Re is a reinsurance company based in Nairobi, Kenya. Kenya Re is the oldest reinsurer in...
Guy Carpenter & Company, LLC, is a global risk and reinsurance specialist based in New York with more than 60 offices worldwide. Placing more than $51...
a leading independent reinsurance and risk intermediary. Customers included most of the world's major insurance and reinsurance companies as well as government...
global reinsurance business in approximately 72 cities and provide global reinsurance coverage. General Re operates the following reinsurance businesses:...
Reinsurance to close (RITC) is a business transaction whereby the estimated future liabilities of an insurance company are reinsured into another, in order...
African Reinsurance Corporation, generally known as Africa Re, is a reinsurance company based in Lagos, Nigeria. Africa Re was founded on 24 February...
Russian National Reinsurance Company (RNRC) is the largest Russian reinsurance company. The Central Bank of Russia is a full shareholder of RNRC. The...