Reinsurance

Where the original insurer relieves itself of part or all of an insurance risk by passing it on to another insurance company in return for the payment of a premium. For major risks, there will typically be a reinsurance chain, with each re-insurer passing part of its risk to other re-insurers, and so on. The reinsurance market enables insurance companies to spread their risk or to limit their exposure to a particular risk.

The glossary to the FSA Handbook sets out a definition of this term. When considering this term in the context of financial services, reference should be made to the FSA Handbook glossary definition of reinsurance.