What does the term "reinsurance" mean in the insurance industry?

The term "reinsurance" refers to the process by which insurance companies transfer a portion of their risk to other insurers. This is done to help manage risk exposure and protect against large losses. By ceding some of their risk to another insurer, the primary insurer can limit its potential losses from claims and stabilize its financial standing. Reinsurance allows insurers to increase their capacity to underwrite more policies while mitigating the impact of significant claims that could otherwise threaten their solvency.

The other options relate to different functions within the insurance industry. Underwriting new policies refers to evaluating and accepting risks for coverage. Adjusting claims involves the assessment of a claim after an insured event occurs to determine the amount of compensation owed to the policyholder. Reviewing policyholder information typically involves ensuring that the details of the policyholder's data are accurate and current, which does not pertain to the concept of reinsurance.