Reinsurance

The placing of part of insurance company with another insurer. Thus where an insurance company has a larger portion of the particular risk that they feel wise to carry themselves, they may buy insurance from another insurer thus "reinsuring" part of their risk. The common types of reinsurance are as follows: Assumed Reinsurance - Risks or part of risks accepted from other companies. Ceded Reinsurance - Risks or part of risks given to other companies. Surplus Reinsurance - Reinsurance of a portion of a risk or risks. Excess Reinsurance - Reinsurance arrangements to recover losses over a specified amount, or over the limit of certain policy or policies. Facultative Reinsurance - Reinsurance arranged on an individual risk basis. Treaty Reinsurance - Reinsurance arrangement for the continuous systematic placing of risks with another company or group of companies. The reinsurer automatically accepts reinsurance on all risks of nature described in the agreement as soon as they are written by the prime company.