By Elisabeth Axiak
Simply put, reinsurance is the way your insurance company protects itself. By sharing risks (we learned about risks in our topic on underwriting), the insurance company can become more stable, secure, and financially strong. In case of really big losses (think Fort McMurray), the losses are shared amongst reinsurance companies around the world.
I know what you’re thinking – do reinsurance companies have insurance too? They do, but that’s for another day. We don’t want to go too deep, otherwise we’ll feel like we’re in Inception.

Contracts on Contracts
Just like your insurance policy is a contract between you and the insurer, insurance companies hold similar contracts with reinsurers. These contracts detail how much risk they will be sharing and at what cost.
Minimizing Risk & Capital Management
By sharing risks with a reinsurer, your insurance company minimizes their overall risk portfolio. And by minimizing their risk, insurance companies can then avoid large losses. This lets them free up additional capital, which in turn makes them a stronger, more secure company.
Industry Boost
Reinsurance allows insurance companies to accept more risks, which lets the industry continue to grow, and allows more people to get insured!
Expertise
Even though your insurance company knows what it’s doing, we stand by the fact that you can always learn things from other people. Having the expertise of another insurer can only help the insurance company continue to get better and better.
Canadian Disasters & Insurance
Natural disasters are one of the most important reasons for reinsurance. Fort McMurray alone cost insurers almost $3.6 billion. Much of this cost was assumed by reinsurance companies around the world.
Canada’s Own Reinsurance Company
There are many reinsurance companies that have Canadian chapters, but FMRP, or Farmer’s Mutual Reinsurance Plan Inc., is Canada’s first and only Canadian-owned reinsurance company. Reinsurance is becoming more and more important these days, and it’s great to see Canada becoming a player in the reinsurance industry!
Peace of Mind
It’s extremely important to us to provide our policyholders with peace of mind. By having great products and services, strong broker relationships, great staff, as well as a strong backing with reinsurance, our community is able to sleep well at night knowing they’re protected.
Check out our infographic below for a full introduction to reinsurance:

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