Reinsurance Assisted Placement Explained (2025): Types, Process & Real-World Example

Understanding Reinsurance Assisted Placement

A reinsurance assisted placement represents a strategic referral made by a reinsurance company to an insurer for a new insurance contract. This contract may subsequently be reinsured by the insurer with the referring reinsurance company, creating a collaborative risk management solution.

What Is Reinsurance Assisted Placement?

Reinsurance assisted placement is a unique type of reinsurance contract initiated by a reinsurer. In essence, reinsurance acts as insurance for insurance companies, providing protection against substantial claims that could overwhelm an insurer's financial capacity.

Typically, insurance contracts originate from insurance companies or brokers. However, in reinsurance assisted placements, the reinsurer proactively refers new insurance contracts to insurers, often expecting that the insurer will purchase reinsurance from them in return.

Key Highlights

• It involves referrals between reinsurance and insurance companies.
• A reinsurer refers a new insurance contract to an insurer.
• The insurer commonly reinsures the contract with the referring reinsurer.
• Depending on agreements, insurers may or may not be obligated to reinsure with the referring company.

How Does Reinsurance Assisted Placement Work?

The reinsurance market is a vital segment of the insurance industry, enabling insurers to mitigate risk by transferring portions of their liabilities to reinsurers. In exchange, reinsurers receive a share of the premiums collected from policyholders.

Both parties negotiate premium levels based on the risk profile of the underlying policies and the reinsurance contract type, ensuring fair compensation and risk distribution.

Types of Reinsurance Assisted Placements

Reinsurance contracts generally fall into two categories: treaty and facultative. Treaty reinsurance covers broad groups of policies, such as an insurer’s entire automobile portfolio. Facultative reinsurance applies to specific individual policies, often those with higher risk or value that fall outside treaty terms.

Examples include clash reinsurance, which protects insurers against multiple claims from a single event, and spot reinsurance, covering riskier subsets of policies within an insurer’s portfolio.

While most insurance contracts originate from insurers or brokers, reinsurers sometimes initiate placements on behalf of insurers. In facultative arrangements, insurers can decide whether to reinsure with the referring reinsurer; treaty agreements typically require reinsuring with that company.

Practical Example of Reinsurance Assisted Placement

Consider Insurance Corp. and Reinsurance Corp., two long-standing partners. Insurance Corp. regularly purchases reinsurance from Reinsurance Corp. Although most contracts come from Insurance Corp.’s sales channels, Reinsurance Corp. occasionally identifies new business opportunities and refers them to Insurance Corp.

Given their facultative reinsurance relationship, Insurance Corp. is not obligated to reinsure with Reinsurance Corp. However, due to their strong partnership, it usually does. Here, Reinsurance Corp. effectively acts as both a reinsurer and an informal broker for Insurance Corp.

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