Reinsurance is insurance purchased by an insurance company from another insurer (the reinsurer) to transfer part of its risk on policies it has issued. By ceding portions of large or numerous risks, the primary carrier reduces its exposure to large claims, stabilizes results, and manages capital more efficiently. Reinsurance can be proportional, where premiums and claims are shared according to a quota, or non-proportional, where the reinsurer covers losses above a specified retention. In life insurance, reinsurance is used to support higher issue limits, special underwriting programs, and product guarantees. Although invisible to policyowners, reinsurance plays a critical role in carrier solvency, pricing, and risk management.

In daily brokerage operations, reinsurance is most visible when large or impaired-risk cases are sent to multiple reinsurers for facultative review. Underwriters rely on reinsurance capacity to offer competitive face amounts and creative solutions. Agencies may hear that a case is "blocked" or "fully placed" with a reinsurer, influencing how future coverage can be layered. Product development teams design new riders and guarantees in consultation with reinsurers, who provide pricing support and risk-sharing structures. While advisors rarely interact directly with reinsurers, understanding that carriers spread risk in this way can help explain why large or complex cases take longer, involve more negotiation, and sometimes require compromise on pricing or benefits.