When an insurance company insures its commitments with another insurance company, it is called Reinsurance. By means of Reinsurance, an insurance company can protect itself and share its risk of losses with other insurance companies. Reinsurance provides insurance to insurance companies. ‘Reinsurance transaction is an agreement made between two parties, called ceding company and re-insurer, whereby ceding company agrees to cede and the re-insurer agrees to accept a certain share of risks upon terms as set out in the agreement. The ceding company is the original insurance company which has accepted the risk and which cedes part of that risk to a re-insurer, which is either another insurance company or a reinsurance company, which accepts that part of the risk, which is ceded’. The role of National Re-insurer for the Indian market has been acquired by the General Insurance Corporation of India. The General Insurance Corporation of India arranges excess of loss protection from the International market. Reinsurance business in India is regulated by the Insurance Regulatory and Development Authority (General Insurance- Reinsurance) Regulation, 2000.
