Tag: Reinsurance
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Reinsurance: What It Is and How It Works
Reinsurance refers to the agreement between a reinsurer and an insurer, where the latter, also known as the ceding party or cedent, transfers a portion of the risk it has insured to the reinsurance company. In this arrangement, the reinsurance company agrees to take on all or part of the insurance policies issued by the…
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What is Facultative Reinsurance?
Facultative reinsurance is a form of reinsurance where there’s a contractual agreement between the reinsurer and the ceding insurer to share a specific risk or policy on a case-by-case basis. This type of reinsurance is designed to help insurers manage complex risks that go beyond their capacity and risk appetite. By doing so, they are…
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What is Automatic Proportional Reinsurance?
Automatic proportional reinsurance is typically based on the agreement between the primary insurer and the reinsurer to split the premiums, expenses, and losses in accordance with a specific predetermined proportion. This reinsurance serves as a backup risk management option for insurance companies that feel they have assumed too much risk and want to transfer a…