In re-insurance, what is the main goal of the primary insurer?

The primary goal of the primary insurer in re-insurance is to reduce risk exposure. Re-insurance allows a primary insurer to transfer a portion of its risk to another insurance company, known as the reinsurer. This transfer helps the primary insurer manage its exposure to losses from claims, particularly large or catastrophic events, which could potentially threaten its financial stability.

By utilizing re-insurance, the primary insurer can stabilize its loss experience, maintain adequate surplus, and ensure that it can meet its policyholder obligations even in adverse scenarios. This risk management strategy is fundamental to the insurance industry, as it helps maintain solvency and ultimately protects the interests of policyholders.

While increasing profits, expanding portfolio coverage, and minimizing customer claims may also be considerations for primary insurers, these aspects are secondary to the primary goal of reducing risk exposure when engaging in re-insurance practices. This core objective fundamentally aligns with the principles of risk management inherent in the insurance business.