What Is Reinsurance?
Reinsurance is insurance that insurers buy from other insurers to spread their own risk. After a regional hurricane, a primary insurer’s losses are partly covered by its reinsurers, which is what lets it keep paying policyholders instead of going bankrupt. It operates behind the scenes and is invisible to policyholders.
Why it matters
Reinsurance is why a single catastrophic event does not wipe out your insurer — and why your premium ultimately helps fund that backstop.
Common confusion
Reinsurance protects the insurer, not you directly. You cannot claim against a reinsurer; your contract is with your primary insurer.
Frequently Asked Questions
Do I ever deal with a reinsurer?
No. Reinsurance is a contract between insurers; you only interact with your primary carrier.
Why does it matter to me?
It stabilizes the market and your carrier’s solvency after large disasters, reducing the chance of non-payment.