Reinsurance Flashcards
1
Q
What is reinsurance?
A
Reinsurance is insurance for insurers. It transfers risk from one insurer to another insurer. To reduce the total amount of loss it is liable for, one insurer may pay the other insurer a premium to assume a portion of the risk.
2
Q
The insurer/company reducing its risk is called?
A
The ceding insurer
3
Q
The insurer/company assuming the risk is called?
A
The reinsurer
4
Q
What are the two types of reinsurance?
A
- Facultative reinsurance
2. Treaty reinsurance
5
Q
What is treaty reinsurance?
A
The reinsurer accepts all risks of a certain type from the ceding company.
6
Q
What is facultative reinsurance?
A
The reinsurer considers each risk before allowing the transfer from the ceding company.
