Reinsurer

What Does Reinsurer Mean?

A reinsurer is an insurance company that assumes financial risks from other insurance companies and becomes responsible for handling any future claims associated with those risks.

Insuranceopedia Explains Reinsurer

An insurance company that assumes too much risk runs the possibility of going bankrupt. By transferring some of this risk to a reinsurer, they reduce the likelihood of such an outcome.

Insurance companies may also transfer risk to a reinsurer to make a profit if the payment to the reinsurer is less than what they received from the insured.

Additionally, a company (known as the ceding company) may transfer a risk when it believes the reinsurer has greater expertise in managing and understanding the risk.