Reinsurance emerged with the rise and development of the insurance. Feature of reinsurance is that the reinsurer does not enter into the economic and legal relationship with the insurer - is a function of the insurer. The insurer is not obliged to inform the policyholder of the intention to transfer to reinsurance fully or partially taken risks. However, despite the conclusion of a contract of reinsurance, the insurer remains liable to the insured for the compensation of possible damage in full, for it is a direct or first insurer.
Reinsurance can be:
- Quantitative - suggests the division of the same insurance risk on the part;
- Quality - the insurer specifically expands operations in the area unsuitable for insurance with a high view of the dangers and the risk with reinsurers on them.
In form mutually distinguished reinsurance commitments:
- Optional - done individually, in which the insurer is under no obligation to transfer him to the insurer of any risk. Facultative reinsurance contract provides complete freedom of its members. The disadvantage of this form of reinsurance is the fact that at the time of the insured event risk may not be reinsured;
- Obligatory - is mandatory, contractual in nature. Reinsurance contract concluded for an indefinite period with a right of termination by mutual notification of the parties, the terms should be clearly sformulirovany.To is in contrast to the facultative reinsurance transfer is subject to the risk of not just a single isolated, and most of the insurance portfolio of the insurer.
Distinguish:
- Active reinsurance - taking risks to foreign sales of insurance coverage or guarantees;
- Passive reinsurance - transfer their risks to foreign reinsurers or purchase insurance guarantees.
