A reinsurance company agrees to accept all or a portion of a risk covered by another insurance company. This helps the original insurer spread its risk by transferring part of it to the reinsurer. Reinsurance allows insurance companies to remain financially stable and continue offering coverage to policyholders.
[Reference: Virginia Life, Annuities, and Health Insurance Code, Section 38.2-3700 (Reinsurance), , , ]
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