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When an assurance enterprise insures itself it is called as reinsurance, where by it shares the risk of loss with other company. assurance associates need reinsurance, when they face the danger of having to pay a multitude of claims at the same time and hence have no choice but to face bankruptcy, where as if they have reinsured they are protected to a unavoidable extent. Event like the September 11 attack of the twin towers have caused the closure of any small reinsurance agencies, hence the significance of reinsurance for an assurance enterprise is tremendous.

Types of Reinsurance:

There are two kinds of reinsurances, treaty reinsurance and facultative reinsurance.
Treaty Reinsurance: This kind of reinsurance requires that the reinsurer will assume part or all of a ceding company's accountability for unavoidable sections or classes of enterprise in accordance with the terms of the policy. It is an obligatory ageement as the ceding enterprise has to cede the enterprise and the reinsurer is obliged to assume the enterprise as per the treaty. It is the adored type of reinsurance when groups of homogenous risks are considered.

Facultative Reinsurance: This kind of reinsurance is used while inspecting a single underlying risk of an private contract. It is the reinsurance of all or part of a single procedure after the terms and conditions have been negotiated. It reduces the ceding company's exposure to risk from an private policy. It is non- obligatory.

In other way, reinsurance is classified as proportional and non-proportional reinsurances.
Proportional Reinsurances: The two associates share the excellent as well as risk. The reinsurer commonly pays a ceding commission.

Pro-Rata Reinsurance: It is a classification based on the way the two associates share the risk. The cedent and the reinsurer share a pre decided division of the excellent and losses. It is used widely as it provides surplus protection. There are two types of pro-rata reinsurance, quota share and surplus share.

Quota Share Pro-Rata Reinsurance: The former insurer cedes a fixed division of premiums and loses for every risk accepted.

Surplus Share Pro-Rata Reinsurance: It is different in that not every risk is ceded but only those that exceed unavoidable predetermined amounts.

Non-Proportional Reinsurance: As the name suggests it is not proportional and the reinsurer only responds if the loss suffered by the insurer exceeds a unavoidable amount.

Excess of Loss: It covers a single risk or a unavoidable type of business. Catastrophe reinsurance is a type of excess of loss reinsurance. It provides the captive with a great deal of flexibility.
Stop Loss Reinsurance: It covers the whole catalogue and is also known as immoderate loss ratio reinsurance.

These are the assorted types of reinsurances. There are firms that offer their services as well as their products to help new enterprise start up flourish and succeed.