Final answer:
The transfer of risk on a case-by-case basis from a ceding to an assuming insurer is called reinsurance, different from coinsurance where policyholders and insurers share the loss cost.
Step-by-step explanation:
When a ceding insurer transfers a portion of its risk to an assuming insurer on a case-by-case basis, this process is commonly known as reinsurance.
It is important not to confuse this with coinsurance, which is a situation where an insurance policyholder pays a percentage of a loss and the insurance company pays the remaining cost.
Reinsurance is a mechanism used by insurance companies to manage risk by sharing it with other insurance entities, thereby reducing their potential liabilities on individual claims and promoting stability within the insurance market.
Coinsurance is a practice in insurance where the policyholder pays a percentage of a loss, and the insurance company pays the remaining cost. In the case of ceding and assuming insurers, the ceding insurer transfers a portion of the risk to the assuming insurer, and both parties share the financial responsibility of the risk.