What is referred to as "insurance for insurance companies"?

Reinsurance is often described as "insurance for insurance companies" because it involves one insurance company purchasing insurance from another. This practice allows primary insurers to manage their risk exposure by transferring a portion of their liabilities to reinsurers. By doing so, insurers can protect themselves from significant losses that could arise from large claims or catastrophic events.

Reinsurers take on the risk and provide coverage for some or all of the claims made by the primary insurer's policyholders, thereby enabling the primary insurer to stabilize their finances and continue to provide coverage to their own clients without overexposing themselves to potential losses. This mechanism is crucial for maintaining the financial health of insurance companies and ensuring that they can meet their obligations.

Other concepts like captive insurers, self-funding, and risk retention groups serve different purposes in risk management and insurance market functioning but do not specifically describe a mechanism through which insurers insure their own risk exposure. Captive insurers are essentially subsidiaries created to provide insurance for their parent company, while self-funding refers to an arrangement where a company pays for claims out of its own funds instead of buying insurance. Risk retention groups allow members to pool their risks, but still do not function as a safety net for insurance companies themselves on a broader scale.