Insurance is a process where one (the insured) pays a monetary amount (premium) to another entity (insurance company) in exchange for protection from an uncertain event (the risk). It is a contract of indemnity between two entities, whereby the insurance company agrees to reinstate the insured or its business to the level it upheld when the damage/loss occurred.
Similar to what an insurance company provides to the insured, reinsurance companies provide protection to insurance companies (the cedant) against events that might disrupt proper operations of the insurance company towards the insured. Basically reinsurance companies insure insurance companies.
Other players or layers also exist within the industry; insurance brokers, reinsurance brokers, and service provider like surveyors, third party administrators, and actuarial service providers to name a few.
In the upcoming articles, we will attempt to simplify the various concepts in order to ease the reader into more advanced topics and practices within the industry.