Reinsurance is the infrastructure of the insurance market: an insurer transfers part of the risk it has assumed to another insurer — a reinsurer — and thereby manages the weight of its portfolio. In Georgia the field is regulated by the Law of Georgia on Insurance Activity, which defines reinsurance as a separately licensed activity. On this page we explain the legal logic of reinsurance: what it is as an activity, who may conduct it, why it is a condition of the insurer’s stability, and how cross-border reinsurance works.
The Concept of Reinsurance within Insurance Activity
Article 3 defines both foundational concepts. Insurance is the relationship protecting personal and property interests of natural and legal persons upon the occurrence of the insured event, at the expense of funds formed from insurance premiums paid by those persons and other lawfully permitted sources. Insurance activity is the insurer’s activity connected with concluding and executing contracts of insurance and reinsurance.
Reinsurance is therefore not a separate commercial phenomenon but an integral part of insurance activity, regulated by the same statute. A reinsurer stands in the same position as an insurer: it must hold a licence and submit to state supervision.