In general terms, reinsurance is insurance for insurance companies. It is a contract whereby a reinsurer assumes the commitment to indemnify an insurance company for losses which may arise related to the latter’s insurance policies.
Assignment and Retrocession
These resources are also part of the reinsurance market. Insurance companies transfer part of a specific risk or a portfolio of risks to reinsurers. This is known as a reinsurance assignment. Reinsurers, in turn, have the resource of retrocession, passing on part of the responsibilities they have taken on other reinsurers, in order to protect their assets.
To guarantee accepted risks, honor commitments and maintain financial health, insurance companies pass on part of the risks, and the premiums, to reinsurers.