India, Dec. 20 -- Reinsurance plays a critical role in the insurance ecosystem by enabling effective risk transfer and supporting the stability and growth of the insurance industry. In a typical reinsurance framework, policyholders transfer individual risks - such as motor, property, life, health, business, and catastrophe risks - to direct insurers in exchange for premiums. Direct insurers, in turn, pass on a portion of these risks and premiums to reinsurers to achieve a balanced and diversified insurance portfolio.

Reinsurers absorb actuarial and catastrophic risks from insurers, helping them limit exposure to large or unpredictable losses and manage capital more efficiently. Reinsurers may further transfer part of these risks to retr...