In a reinsurance arrangement, which term describes the insurer that cedes risk to the reinsurer?

In a reinsurance arrangement, which term describes the insurer that cedes risk to the reinsurer?

• A. Ceding Insurer
• B. Reinsurer
• C. Policyholder
• D. Adjuster

Answer: (A)

In a reinsurance arrangement, the insurer that cedes risk to the reinsurer is the ceding insurer. This is the company that transfers part of its risk exposure to another company through a reinsurance agreement, helping to reduce potential losses, stabilize results, and free up capital. The reinsurer is the party taking on that risk, not the one transferring it. The policyholder remains the insured under the original policy and interacts with the ceding insurer for coverage and claims, while the adjuster handles investigations and settlements of claims. The term ceding insurer (also called the cedent or primary insurer) precisely describes the entity that cedes risk.

In a reinsurance arrangement, the insurer that cedes risk to the reinsurer is the ceding insurer. This is the company that transfers part of its risk exposure to another company through a reinsurance agreement, helping to reduce potential losses, stabilize results, and free up capital. The reinsurer is the party taking on that risk, not the one transferring it. The policyholder remains the insured under the original policy and interacts with the ceding insurer for coverage and claims, while the adjuster handles investigations and settlements of claims. The term ceding insurer (also called the cedent or primary insurer) precisely describes the entity that cedes risk.