How Many Types of Reinsurance Are There?

Different Types Of Reinsurance

In a previous blog, we have already looked at the meaning and the function of reinsurance. Further to that, we will now look at the different types of reinsurances to better understand which form of reinsurance suits you better. 

Related Blog: What is Reinsurance: Types, Functions, How it Works, Advantages & More

Different Types of Reinsurance

Based on the kind of policy a company offers, the kind of reinsurance policy needed changes. Here we list down all the different kinds of reinsurances available. 

1. Facultative Reinsurance: 

A primary insurer purchases facultative reinsurance to cover a single risk—or a group of risks—held in the primary insurer’s book of business. Facultative reinsurance mostly covers a single transaction and is a one-time contract with the insurance company.

The ceding firm and the reinsurer develop a facultative certificate that states that the reinsurer is absorbing a specific risk in a facultative reinsurance contract. 

Example:  Let’s say an insurance company writes a policy on a substantial piece of real estates, such as a huge corporate office building. The insurance is written for Rs 50 crore, which means the original insurer might be liable for Rs. 50 crore if the structure is severely damaged. However, the insurer anticipates that it will be unable to pay out more than Rs. 30 crores.

As a result, before agreeing to issue the policy, the insurer must seek facultative reinsurance and test the market until it finds buyers for the full Rs 20 crores. The insurer may receive Rs 20 crores in parts from ten separate reinsurers. It cannot, however, consent to issue the policy without this. It can issue the insurance once it has received consent from the firms to cover the Rs 20 crores and is convinced that it can cover the entire amount if a claim is filed. 

2. Treaty Reinsurance: 

Treaty reinsurance is insurance acquired from another insurer by an insurance business. Treaty reinsurance provides additional protection for the ceding insurer’s equity and more stability in the case of exceptional or significant occurrences. There are two types of Treaty insurance: Proportional and non-proportional. 

Example: A treaty insurance could be any insurance policy that has been written off by an insurance company. It could also be a bundle or sum-total of all the insurance policies written by the insurance company. 

3. Proportional Reinsurance: 

Proportional reinsurance is a type of treaty reinsurance wherein the reinsurer is required to share a percentage of the losses under a proportional reinsurance arrangement, often known as “Pro Rata” reinsurance. A prorated part of the insurer’s premiums is paid to the reinsurer. 

Example: If suppose a company claims insurance for Rs 50,000 the reinsurer will only share a part of the claim and not the whole amount. So it’s possible that on claiming the insurance, the reinsurance company is only liable to pay a pre-decided percentage.

4. Non-Proportional Reinsurance: 

Non-proportional reinsurance arrangements, often known as “excess of loss” reinsurance, oblige the reinsurer to payout only if the insurer’s claims exceed a certain limit. A “retention” or “priority” is the name given to this sum.

Example: If an insurance firm seeks a reinsurance agreement that covers all losses from a natural disaster over Rs 1 Million, or that covers Rs 500,000 over Rs 500,000 in a single Rs 1 million loss.

5. Risk Attaching Reinsurance: 

The term “risk attaching” refers to a treaty in which the Reinsurer only pays the Ceding party for losses arising from policies issued (new or renewed) or in force during the reinsurance contract period, regardless of when the losses occurred. 

Example: In case a policy is claimed in January, the insurance company will only settle the bill at a particular date. 

6. Loss-Occurring Coverage:

The term “loss arising” refers to the fact that the Reinsurer only pays the Ceding party for losses that occur within the reinsurance contract period, regardless of when the policy’s insurance caused the losses.

Losses-occurring-during reinsurance contracts often require the reinsurer to compensate the reinsured for all losses suffered during the reinsurance contract period, regardless of when the loss-generating policies were issued.

Example: Suppose the insurance policy is valid from June 1st, 2021 to May 31st, 2022. The Ceding party purchased a loss occurrence reinsurance contract that ran from January 1st to December 31st, 2021. The Reinsurer will cover a loss that occurred on December 29th, 2020.

Related Blog: Top 12 Advantages of Reinsurance

Facultative And Treaty Reinsurance: What’s the Difference?

Two forms of reinsurance contracts are facultative reinsurance and reinsurance treaties. When it comes to facultative reinsurance, the primary insurer covers a single risk or a group of risks that it has on its books. Treaty reinsurance, on the other hand, is insurance obtained from another firm by an insurer. The reinsurer can examine the risks in an insurance policy and accept or reject them using facultative reinsurance. In a treaty reinsurance policy, on the other hand, the reinsurer usually takes all of the risks associated with particular policies.

Reinsurance Companies In India

There are a number of reinsurance companies in India, that offer reinsurance services to insurance providers.

  1. Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft – India Branch (Munich Re- India Branch)
  2. Swiss Reinsurance Company Ltd, India Branch
  3. SCOR SE – India Branch
  4. Hannover Rück SE – India Branch
  5. RGA Life Reinsurance Company of Canada, India Branch
  6. XL Insurance Company SE, India Reinsurance Branch
  7. AXA France Vie – India Reinsurance Branch
  8. Allianz Global Corporate & Specialty SE, India Branch
  9. Lloyd’s India Reinsurance Branch
  10. Markel Services India Private Limited


In its most fundamental form, reinsurance is insurance for insurers. Individuals, for example, require health, vehicle, and life insurance. To properly manage their huge portfolios, insurance companies require reinsurance. A reinsurance contract not only reduces the risk for insurance companies but also allows them to diversify their portfolio and grow their company.

Our reinsurance brokers can assist you in locating the appropriate reinsurance firm to meet your demands and provide leverage to your business. You may now contact or obtain a quote for a suitable reinsurance firm through our web portal.

Life & General A Reinsurance Consulting Firm

Life & General is one of India’s most well-known insurance brokerage organisations. Life & General began operations in 2001 and was one of the first insurance brokers in India to be licenced and recognised by the IRDAI (Insurance Regulatory & Development Authority of India).

With offices in Pune and Mumbai and over two decades of significant expertise, Life & General has been skillfully servicing its consumers. With its portfolio, Life & General offers a comprehensive variety of insurance services, including life, health, marine, property, engineering, general aviation, liability, motor, and reinsurance.


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