1. Reinsurance equips a company to take more clients:
The main benefit of reinsurance is to protect a company from insolvency. It ensures that insurance companies are able to make payment on all claims. This strengthens the company’s foundations and gives them the confidence to take on more risk and offer their services to even more clients.
2. Reinsurance reduces the burden of risk:
When an insurance company single-handedly insures a large number of clients, they take on a huge amount of risk. Reinsurance is an ideal strategy to minimize that risk, by placing some of the burden on a reinsurance company instead of shouldering the burden completely alone.