thumb|Headquarters of the [[Munich Reinsurance Company]]
Reinsurance is the transfer of liability from the insurance company, which issued the insurance contract, to the reinsurance company. The reinsurance company assumes some of an insurance company's liability in exchange for a payment or a portion of the insurance contract costs. The liabilities assumed by the reinsurance company no longer count against the transferring company's underwriting capacity, enabling the insurance company to underwrite new policies.
Functions
Insurers commonly use reinsurance as part of their risk and capital management, transferring a portion of their underwriting risk to reinsurers in exchange for a premium.
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External links
- Captive Review Captive Review
- Reinsurance, by Gary Patrick [http://www.casact.org/library/studynotes/ch7.pdf]
- Youtube: "What is Reinsurance?", by Sebastian Lischewski