Glossary
Reinsurance
Reinsurance is insurance bought by an insurer from another insurer, called a reinsurer, to share part of the risk on the policies it has written.
Reinsurance explained
No insurer wants a single large claim, or a run of claims, to threaten its ability to pay. Reinsurance spreads that risk. The insurer keeps a portion of each policy, called the retention, and passes the rest to a reinsurer in exchange for part of the premium.
Reinsurance can be arranged for a whole book of business under a treaty, or case by case for unusually large or complex risks, which is called facultative reinsurance. For example, an insurer with a K500,000 retention that writes a K2,000,000 policy might reinsure the K1,500,000 above its retention.
Why it matters in life insurance
Reinsurance lets Zambian life insurers offer higher sums assured than their own capital alone would support, and it is part of the solvency picture regulators review. Ontech LifeI ERP records treaty and facultative arrangements, calculates ceded premiums and tracks reinsurance recoveries on claims.