What is reinsurance?

It is a process whereby one entity (the reinsurer) takes on all or part of the risk covered under a policy issued by an insurance company in consideration of a premium payment.
In other words, it is a form of an insurance cover for insurance companies.
In reinsurance an insurance company (the insurer) transfers a portion of its risks to another (the reinsurer).
Legal rights of the policyholders (insured) are in no way affected by reinsurance, and the insurer remains liable to the insured for insurance policy benefits and claims.