---
title: "What Is Reinsurance?"
description: "How a ceding insurer transfers risk to another insurer, and why that contract is not a direct policyholder guarantee."
canonical: "https://spot.insure/insurance-glossary/reinsurance"
page-type: "insurance-definition"
updated-at: "2026-09-21"
verified-at: "2026-09-21"
entities: ["Spot"]
---

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[Human-readable page](https://spot.insure/insurance-glossary/reinsurance)

# What Is Reinsurance?

How a ceding insurer transfers risk to another insurer, and why that contract is not a direct policyholder guarantee.

Reinsurance is a contract in which a ceding insurer transfers all or part of the risk on policies it has issued. The reinsurer indemnifies the cedent and, absent a cut-through, does not become the policyholder's insurer. [Insurance Topics | Reinsurance](https://content.naic.org/insurance-topics/reinsurance), [Glossary of Insurance Terms](https://content.naic.org/glossary-insurance-terms), [Receivers' Handbook materials — Reinsurance Basics](https://content.naic.org/sites/default/files/call_materials/01%20RHS%20081823%20Materials.pdf)

## What Reinsurance Is

Reinsurance is insurance for insurance companies. The ceding insurer keeps the policyholder relationship and transfers some or all of the risk to another insurer in return for premium. [Insurance Topics | Reinsurance](https://content.naic.org/insurance-topics/reinsurance), [Glossary of Insurance Terms](https://content.naic.org/glossary-insurance-terms)

The assuming insurer indemnifies the cedent for all or part of losses on policies the cedent has issued. That share can be a percentage of each loss, or it can attach only above a threshold. A treaty covers a class of business; a facultative placement covers a named risk. A reinsurer can cede further through retrocession. [Receivers' Handbook materials — Reinsurance Basics](https://content.naic.org/sites/default/files/call_materials/01%20RHS%20081823%20Materials.pdf), [Insurance Topics | Reinsurance](https://content.naic.org/insurance-topics/reinsurance)

## What It Does Not Prove

The reinsurer's duty arises when the ceding company has incurred liability on the original policy. Without a cut-through, the original insured generally has no direct claim on the reinsurer. [Insurance Topics | Reinsurance](https://content.naic.org/insurance-topics/reinsurance), [Receivers' Handbook materials — Reinsurance Basics](https://content.naic.org/sites/default/files/call_materials/01%20RHS%20081823%20Materials.pdf)

Reinsurance is not a finding that the cedent can collect every recoverable, that the policyholder is safer, or that the reinsurer is the insurer of record. Fronting is a particular pattern of cession, not a synonym for reinsurance. [Insurance Topics | Reinsurance](https://content.naic.org/insurance-topics/reinsurance), [Receivers' Handbook materials — Reinsurance Basics](https://content.naic.org/sites/default/files/call_materials/01%20RHS%20081823%20Materials.pdf)

## What to Confirm

Keep the issuing insurer, any named reinsurer, and any cut-through as separate facts. [Insurance Topics | Reinsurance](https://content.naic.org/insurance-topics/reinsurance), [Receivers' Handbook materials — Reinsurance Basics](https://content.naic.org/sites/default/files/call_materials/01%20RHS%20081823%20Materials.pdf)

## Related terms

- [What Is a Fronting Carrier?](/insurance-glossary/fronting-carrier)
- [What Is an Insurance Carrier?](/insurance-glossary/insurance-carrier)
- [What Is Policyholder Surplus?](/insurance-glossary/policyholder-surplus)
- [What Is an AM Best Rating?](/insurance-glossary/am-best-rating)

## Sources

- [Insurance Topics | Reinsurance](https://content.naic.org/insurance-topics/reinsurance) — National Association of Insurance Commissioners; Insurance for insurance companies; cedent transfers risk; reinsurer's obligation arises when the company's original-policy liability has been incurred; retrocession; last updated 10/24/2025; accessed 2026-09-21.
- [Glossary of Insurance Terms](https://content.naic.org/glossary-insurance-terms) — National Association of Insurance Commissioners; Reinsurance; Authorized Reinsurance; accessed 2026-09-21.
- [Receivers' Handbook materials — Reinsurance Basics](https://content.naic.org/sites/default/files/call_materials/01%20RHS%20081823%20Materials.pdf) — National Association of Insurance Commissioners; Reinsurance as indemnity of the ceding company; proportional versus non-proportional; treaty versus facultative; generally the reinsurer has no direct obligation to the original insured absent a cut-through; accessed 2026-09-21.

## Agent and Developer Resources

- [Markdown page](https://spot.insure/insurance-glossary/reinsurance.md)
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