The practice by which an insurance company accepts a very large risk and later shares it with other insurance companies is called

The practice by which an insurance company accepts a very large risk and later shares it with other insurance companies is called re-insurance. Re-insurance is a way for insurance companies to protect themselves against the risk of a large loss by transferring some of that risk to another company. For example, if an insurance company has a policy that covers a very large risk, such as a major natural disaster, they may not be able to handle the financial impact of that loss on their own. In such cases, they may choose to transfer some of that risk to another insurance company through re-insurance. The original insurance company (the cedent) pays a premium to the re-insurance company, who then takes on a portion of the risk associated with the policy. Re-insurance can be an effective way for insurance companies to manage their exposure to risk, as it allows them to spread the risk over a larger pool of companies. It also helps to ensure that policyholders can be adequately compensated in the event of a major loss, even if the original insurance company is not financially able to cover the entire loss on their own.