SUPERVISORY STANDARD ON THE EVALUATION OF THE REINSURANCE COVER OF PRIMARY INSURERS AND THE SECURITY OF THEIR REINSURERS

Insurance companies assume risk on behalf of policyholders. They mitigate these risksby acquiring insurance with reinsurers. Through the use of reinsurance, an insurer can reducerisk, stabilise its solvency, use available capital more efficiently and expand underwritingcapacity. Reinsurance helps an insurer obtain a desired, prudent risk profile.1 However, irrespective of the reinsurance obtained, the primary insurer normally remains contractuallyresponsible for paying the full claim amounts to policyholders.2. Reinsurance may be provided by pure (or professional) reinsurers or by primaryinsurers also authorised to write reinsurance.[...] [according to site editor's information]]