Reinsurance

Reinsurance refers to the practice whereby an insurance company transfers part of the risks and liabilities it has underwritten to other insurance companies (reinsurers). In foreign trade, reinsurance is commonly used in large-value cargo transportation insurance, export credit insurance, and similar scenarios to spread huge risks and safeguard the solvency of the original insurer. When using reinsurance, foreign trade enterprises should note: reinsurance is an arrangement between insurance companies and does not affect the validity of the original insurance contract; the insured still claims directly from the original insurer. The cost of reinsurance may indirectly affect premiums. Reinsurance differs from co-insurance: co-insurance involves multiple insurers directly co-underwriting the same subject matter, whereas reinsurance involves the original insurer transferring part of the risk to a reinsurer. In addition, reinsurance helps enhance underwriting capacity, enabling insurers to accept higher-value policies, thereby facilitating the conclusion of large foreign trade projects.