| Abstract: |
This article examines the role of reinsurance in the U.S. insurance industry. Reinsurance is sometimes referred to as insurance for the insurance companies. It is a method created to divide the task of handling risk among several insurers, often through cooperative arrangements called treaties, which specify ways in which members of the group will share risks. Reinsurance may be defined as the shifting by a primary insurer, called the ceding company, of a part of the risk it assumes to another company, called the reinsurer. Financial planners should be aware of the concept of reinsurance, as a greater percentage of life insurance policies sold today are being reinsured. |