Who provides insurance for insurers?

Reinsurers play a critical role in the insurance industry by providing insurance for insurers themselves. This process, known as reinsurance, allows primary insurers to manage their risk exposure by transferring a portion of their liability to another insurance company. By doing so, reinsurers help primary insurers stabilize their financial performance, absorb larger risks, and ensure they can meet their obligations to policyholders.

Reinsurance can take various forms, including treaty reinsurance, which covers a group of policies, and facultative reinsurance, which is specific to an individual risk. This arrangement is vital for maintaining the overall health of the insurance market, especially during catastrophic events where losses can exceed the primary insurer's capacity. Thus, reinsurers are essential in enabling stability and sustainability within the insurance sector, which is why they are identified as providing insurance for insurers.