Question

What is reinsurance?

Answer 1

Sometimes the amount of total insurance may be so high that the liability becomes excessive for an insurer. In such a case, the insurance company can transfer a part of the risk to another insurer by getting the subject-matter insured again. This is known as re-insurance. Under the Insurance Act every insurer must reinsure a part of his risk as specified by the Government from time to time with Indian Reinsurance Corporation or Indian Guarantee Corporation.