Reinsurance

Reinsurance is insurance policy purchased by insurance companies to cover itself against the risk of major claim events that occurs due to any uncertainty.
The company that purchases the reinsurance policy is called “ceding company or reinsured” and the company that issues the reinsurance policy is called “assuming company or reinsurer”.
The insurance company that purchases reinsurance policy pays a premium to the reinsurance company, who in return would provide coverage or share in terms of claim settlement incurred as liability.It helps insurance companies remain solvent even after major disasters like cyclone, earthquake etc.Examples of major reinsurance companies- Swiss Reinsurance Company Ltd., Munich Re, General Reinsurance AG etc.
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