Definition and Purpose
Reinsurance, by **Definition**, is an insurer transferring part of its risk portfolio to another insurer (the reinsurer). It manages large losses.How It Works
Primary insurer pays a premium; reinsurer covers an agreed share of future claims, reducing the insurer’s financial exposure.Key Benefits
Allows insurers to underwrite more policies, diversify risk, and protect against catastrophic events, ensuring stability.Common Types
Key types: Treaty Reinsurance (automatic portfolio coverage); Facultative Reinsurance (for specific, individual risks).Author
