Reinsurance

Reinsurance is insurance purchased by an insurer from another insurer to transfer part of its risk and financial liability. It helps insurers manage losses, capital, and exposure to large or concentrated claims.

Ceded Reinsurance: Insurance risk that an insurer transfers to a reinsurer under a reinsurance contract. It names the portion of an insurer’s risk passed outward through reinsurance.
Insurance Policy: A contract in which an insurer agrees to provide specified financial protection in exchange for a premium. Reinsurance covers liabilities that originate in policies issued by the cedent.
Quota Share Reinsurance: Proportional reinsurance in which the cedent and reinsurer share premiums and losses at an agreed percentage. This structure shares each covered policy’s economics in a fixed proportion.
Solvency II: The European Union’s regulatory framework for insurers’ capital, governance, and risk management. Its capital rules recognize risk mitigation through qualifying reinsurance contracts.
Coinsurance: An arrangement in which multiple insurers share coverage or an insured person shares costs with an insurer. Unlike reinsurance, coinsurance can divide coverage directly at the policy level.
Assumed Reinsurance: Insurance risk that a reinsurer accepts from another insurer under a reinsurance contract. It describes the risk received by the reinsurer on the other side of a transfer.
Insurable Risk: A potential loss with characteristics that allow it to be pooled and priced for insurance. Reinsurance transfers defined insurable risks rather than uncertainty in general.
Surplus Share Reinsurance: Proportional reinsurance that cedes the portion of a policy’s risk exceeding the cedent’s retained line. It lets an insurer accept larger policies while limiting its own retained amount.
Insurance-Linked Securities: Financial instruments whose returns are linked to insurance risks rather than only to conventional financial markets. These securities extend risk transfer beyond traditional reinsurers.
Retrocession: Reinsurance purchased by a reinsurer to transfer some of the risks it has accepted. It continues the same risk-transfer chain one level beyond the reinsurer.

Linked from 5 pages