REINSURANCE BUSINESS ON INSURANCE MARKET OF THE REPUBLIC OF SRPSKA

Abstract

In many cases in insurance business, the insurer takes the risk which by the level of insurance or probable maximum loss (PML) exceeds its financial capacity. The insurer can cover with reinsurance and coinsurance the part of the contractual obligations that exceed the capacity of the insurance company. Coinsurance occurs when risk is shared among several insurers, and reinsurance occurs when the excess of risk is transferred from one to more reinsurers. Reinsurance is the process which enables the insurance company to avoid the risk of disasters in the insurance mechanism. Reinsurance is the re-insurance or insurance of the insurance. "Reinsured" is an insurance company whose insurance risks are reinsured in whole or in part, while the "reinsurer" is the company of reinsurance business. Reinsurance is of highly importance for the safety of management of the insurers, because it increases the capacity of risk-taking in insurance, protects one's own safety and safety of the reinsured. In addition, this can be supported by a common saying which is used in the insurance sector and that is: "good insurance begins with reinsurance."