Re-insurance business – Meaning

Insurance companies retain only a part of the risk (less than 10 per cent) assumed by them, which can be safely borne from their own funds. The balance risk is re-insured with other insurers. In effect, therefore, re-insurance is insurer’s insurance. It forms the backbone of the insurance business. It helps to provide a better spread of risk in the international market, allows primary insurers to accept risks beyond their capacity settle accumulated losses arising iron catastrophic events and still maintain their financial stability. While GICs subsidiaries look after general insurance, GIC itself has been the major reinsurer. Currently, all insurance companies have to Bide 20 per cent of their reinsurance business to GIC. The aim is to ensure that GIC’s role as the national reinsurer remains unhindered. However, GIC reinsures the amount further with International companies such as Swiss (Switzerland), Manicure (Germany), and Royale (UK. Reinsurance premiums have seen an exorbitant increase in recent years, following the rise in threat perceptions globally.

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