Which party in a reinsurance transaction is the insurer that transfers risk to the reinsurer?

Which party in a reinsurance transaction is the insurer that transfers risk to the reinsurer?

• A. Ceding Insurer
• B. Reinsurer
• C. Insured
• D. Broker

Answer: (A)

In reinsurance, the party that transfers risk is the ceding insurer—the primary insurer that originally wrote the policy. This insurer hands off part of its exposure to the reinsurer through a reinsurance contract, in exchange for a premium and the reinsurer’s agreement to share or assume losses. The reinsurer is the one taking on that risk, not the one transferring it. The insured is simply the person whose policy is being reinsured, and the broker is typically an intermediary who facilitates placement rather than a party to the risk transfer itself.

In reinsurance, the party that transfers risk is the ceding insurer—the primary insurer that originally wrote the policy. This insurer hands off part of its exposure to the reinsurer through a reinsurance contract, in exchange for a premium and the reinsurer’s agreement to share or assume losses. The reinsurer is the one taking on that risk, not the one transferring it. The insured is simply the person whose policy is being reinsured, and the broker is typically an intermediary who facilitates placement rather than a party to the risk transfer itself.