Reinsurance is insurance purchased by an insurer to transfer specified parts of its own insurance risk to a reinsurer. It can help manage large individual exposures or many losses from one catastrophe. The original insurer generally remains responsible to its policyholders under their contracts, even when recovery from the reinsurer is disputed.
For Nepal's market, catastrophe exposure makes this an important industry concept, but customers should still submit claims to their own insurer. Treaty reinsurance and facultative reinsurance are different ways to arrange the transfer. The IAIS supervision framework provides the international regulatory context for reinsurance management.