Reinsurance is an insurance policy that transfers some of one insurer’s risks to a second insurer. In this relationship, one insurer buys a reinsurance policy in order to offload some risks from the policies it’s already issued. This insurer is called the ceding insurer or cedent because it cedes or hands over its existing risks. The second insurer, the one who issues the reinsurance policy and takes over part of the ceding insurer’s risks, is called the reinsurer.

I. Reasons for Reinsurance

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