PlumBot: Bot: Creating new article from JSON

2026-03-09T16:39:21Z

Bot: Creating new article from JSON

New page

🔄 '''Reinsurance''' is a mechanism through which [[Definition:Insurance carrier | insurance carriers]] transfer portions of their [[Definition:Risk | risk]] portfolios to other insurers, effectively purchasing insurance for themselves. Often described as "insurance for insurance companies," reinsurance allows a [[Definition:Ceding company | ceding company]] to protect its balance sheet against catastrophic or unexpectedly concentrated [[Definition:Loss | losses]]. The practice dates back centuries and remains a foundational pillar of global insurance markets, enabling [[Definition:Underwriting | underwriting]] capacity that no single carrier could safely sustain alone.

⚙️ A ceding company enters into a [[Definition:Reinsurance treaty | reinsurance treaty]] or [[Definition:Facultative reinsurance | facultative agreement]] with a [[Definition:Reinsurer | reinsurer]], specifying which risks or layers of loss the reinsurer will assume. Under [[Definition:Proportional reinsurance | proportional arrangements]], the reinsurer shares [[Definition:Premium | premiums]] and losses at a fixed ratio, while [[Definition:Non-proportional reinsurance | non-proportional structures]] — such as [[Definition:Excess of loss reinsurance | excess of loss]] — trigger coverage only once losses breach a defined [[Definition:Retention | retention]] threshold. The [[Definition:Ceding commission | ceding commission]] paid back to the primary insurer offsets its acquisition costs, and detailed [[Definition:Bordereau | bordereaux]] track the underlying exposures flowing through the arrangement.

💡 Without reinsurance, the global insurance industry would lack the financial resilience needed to absorb large-scale events like hurricanes, earthquakes, or pandemic-related [[Definition:Claim | claims]]. It stabilizes [[Definition:Solvency | solvency]] ratios, smooths earnings volatility, and gives primary carriers the confidence to write larger or more complex [[Definition:Policy | policies]]. Regulators and [[Definition:Rating agency | rating agencies]] alike view a carrier's reinsurance program as a key indicator of financial health, making it central to both strategic planning and [[Definition:Capital management | capital management]].

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Retrocession]]
* [[Definition:Catastrophe bond (cat bond)]]
* [[Definition:Reinsurance treaty]]
* [[Definition:Excess of loss reinsurance]]
* [[Definition:Ceding company]]
* [[Definition:Risk transfer]]
{{Div col end}}

Definition:Reinsurance - Revision history

PlumBot: Bot: Creating new article from JSON