THE ROLE OF REINSURANCE IN INSURANCE

Insurance companies carry out risk spreading through the co-insurance and reinsurance mechanism, consisting of the participation of more companies in the provision of high-value assets. Reinsurance is a form of insurance whereby an insurance organization can transfer to another reinsurer, partly or fully, its payment obligations arising from the insurance contracts that it has concluded. In the reinsurance ratios, the insurance companies appear in a double position - giving other insurance companies some of the risks assumed under direct insurance, being reinsured, but receiving different risks to reinsurance, acquiring the quality of reinsurers. Reinsurance intends to satisfy some multiple needs of the direct insurer and can provide means to counteract the risks associated with the fluctuations in compensation costs, the reinsurer will contribute to the payment of compensations on behalf of the reinsurer. Life insurance has characteristics that influence reinsurance: the average life of the insurance, the insurance is concluded for a fixed amount insured, the capital accumulation. In life reinsurance, almost all reinsurance arrangements are proportional agreements, and the largest share have the "surplus" agreements. Reinsurance plays an important role because it fulfills the following functions: it confers capacity, creates stability, helps to consolidate financial strength. The adjustment of the client portfolio in terms of the changes of reinsurance agreement, required by the reinsurer, can only be done by concluding the insurance contracts. In life insurance, reinsurance contracts contain provisions that meet the need of the insurer to have long-term protection