The transfer of insurance business from one insurance
company to another insurance company is known as reinsurance. The reinsurer may
also obtain reinsurance from another reinsurer. Reinsurance has a very
important role in insurance business. To access how much an insurance company
is manageable and strong, it is necessary to know the reinsurance business of
that company. Insurance is governed by the law of average. The creation of risk
bearing capacity is called reinsurance. The reinsurance is made between two or
more than two insurers. Though, Nepalese insurance law does not define
reinsurance. T is meaningless to imagine insurance business without
reinsurance.
Importance of Reinsurance
1.
To strengthen the insurance companies
2.
To making the insurance business reliable and to
keep always attractive
3.
To make the new insurance companies competent in
insurance business
4.
To widen insurance business
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