In fact, the operational relationship of reinsurance is varied and complex, and there are roughly six forms of reinsurance according to the different subjectivity of the departing company and the incoming company.1, both parties for direct insurance company (that is, directly engage in the insurance business of insurance company) : one party will undertake part of an insurance business to the other party;2, both sides for the insurance company directly: both the insurance business will each contracting separated points into each other;3, one party to the insurance company directly, the other party for reinsurance company (namely can only accept reinsurance business, can not directly engage in the insurance business) : the former will undertake insurance business to separate the latter;4, one party to the insurance company directly, the other party for reinsurance company: the former will undertake insurance business ceded to the latter, the latter will undertake reinsurance cent gives business to the former;5. Both parties are reinsurance companies: One party cedes the reinsurance business contracted to the latter;6. Both parties are reinsurance companies: the reinsurance business contracted by both parties shall be divided into and out of each other.
Compared to the original insurance, works through the combination of diversification, can be very flexible, and therefore, based on the purpose of the different risk dispersion, also can become complicated.The above six kinds of relationships are only a single line, but in fact, in practice, there will be more diverse and complex.For example, for the same reinsurance contract, there can be multiple companies that share premiums (that is, companies that undertake reinsurance business), which can be either reinsurance companies or direct insurance companies.
In fact, all the original insurance companies can apply for the business of reinsurance. In other words, in addition to the specialized reinsurance companies in the market, such as the head companies such as Munich Reinsurance company and Swiss Re insurance Co., LTD., which we most often hear, almost all insurance companies are reinsurance companies.This also explains why the financial statements of almost all insurance companies usually have both items that are divided into premiums and items that are divided into premiums.
In fact, reinsurance and the original insurance is distinguishing.Reinsurance companies can be signed at the same time, for example, several, which disperses risk further.Of course, with the development of financial industry, the role of reinsurance, also some changes have taken place, outside the traditional reinsurance business, many insurance companies through the way of "financial reinsurance, to manage the company's solvency.
As one of the means of risk management, if the reinsurance company thinks that its reinsurance risk is too high, the reinsurance company can further diversify the risk by subcontracting or reinsurance, and even securitization of risk liabilities can be introduced into the capital market to derive more diversified financial instruments.Since such bonds are not highly correlated with most investment products in the capital market, they are an effective means to reduce and diversify risks for both the issuer and the investor.
