What is the term for when an insurer assumes the risk from another insurance company?

The correct term for when an insurer assumes the risk from another insurance company is reinsurance. This process involves one insurance company, known as the ceding insurer, transferring a portion of its risk to another insurance company, the reinsurer. The purpose of reinsurance is to manage risk and protect the ceding insurer from large financial losses. By spreading out the risk, insurance companies can stabilize their operations and ensure they can meet their policyholder obligations.

In contrast, underwriting refers to the process of evaluating the risk of insuring a person, property, or entity and determining the appropriate premium for the coverage. Coinsurance is a term used to describe a situation in which multiple insurance companies share the risk and liability for a particular policyholder, usually indicated by a specific percentage of coverage. Risk management refers to the strategies and practices employed by an insurer to identify, assess, and mitigate risks associated with their policies. Thus, reinsurance specifically addresses the scenario of one insurer taking on the risk from another insurer, making it the most accurate choice in this context.