When lakhs of people transfer their risks on insurers (insurance companies), insurers also face the problem of accumulation of risks. Suppose 1000 people insured with one insurer against the total sum of 2 Crores. The relative premium is 50Lakhs on the assumption that 100 people may die. If suddenly an earthquake occurs and 200 people die the premium is not adequate to pay the claims. Therefore, any amount of Liability beyond their Capacity is insured with another insurance company. This is called Reinsurance. They cede certain % of risk with Reinsurance Company. General Insurance Corporation of India is the re-insurer in India.