What is the term for an insurance company taking on risk from another insurer?

The term for an insurance company taking on risk from another insurer is reinsurance treaty. In the insurance industry, a reinsurance treaty is a formal agreement between two insurance companies where the reinsurer agrees to accept all or part of the risk associated with certain policies written by the ceding insurer. This arrangement allows the primary insurer to mitigate risk, improve liquidity, and stabilize its financial performance by transferring a portion of its risk exposure to the reinsurer.

Reinsurance treaties can be structured in various ways, such as quota share or excess of loss, allowing for flexibility in how risks are managed. By engaging in reinsurance, insurers can protect themselves against large losses and ensure that they are able to meet their policyholder obligations even in adverse situations.

The other choices pertain to different concepts within the insurance industry. Underwriting refers to the process of evaluating risk and determining the terms of insurance coverage provided to policyholders. Excess coverage typically relates to supplementary insurance that provides additional coverage above a specified primary policy limit. Risk sharing agreements, while similar in concept to reinsurance, do not involve the transfer of risk from one insurer to another in a formal treaty-like structure.