Which party typically shares the risks of insurance with the original insurer?

The reinsurer is the party that typically shares the risks of insurance with the original insurer. Reinsurance is a mechanism that allows insurers to manage their risk exposure by transferring portions of their risk portfolios to other parties, specifically reinsurers. This arrangement provides financial protection to the primary insurer, allowing them to underwrite more policies and maintain stability in their operational capacity.

By engaging in reinsurance, the original insurer can mitigate the impact of significant losses and ensure solvency even in adverse circumstances. The reinsurer agrees to take on some of the risks in exchange for a premium, effectively spreading the risk across multiple entities. This practice is essential in the insurance industry, as it helps stabilize insurers and allows for more substantial coverage across various policyholders.

The involvement of other parties, such as the policyholder, broker, or loss adjuster, does not facilitate risk-sharing in the same way as reinsurance. The policyholder is the individual or entity purchasing insurance, the broker acts as an intermediary to facilitate the transaction, and the loss adjuster assesses claims but does not share in the actual insurance risk.