What does Finite Reinsurance mean?

It is a risk management tool fit for insurance companies, by which insurance companies allow only a smaller degree of risk to shift to the reinsuring company. By taking advantage of this option, insurance companies benefit of lower costs, exactly because only a smaller degree of risk is being passed on. Estimative values of these degrees of risks are being obtained by applying accountancy formulas to the process of calculation.

Finite Reinsurance explained

Most commonly, insurance companies do have reserves with which they will offer coverage in case any risk arises, and the reinsurance company will offer coverage only in the case the pool of reserve is not enough for that purpose. Certainly this is a lower risk measure for the reinsuring company, so it can afford to offer its services at much lower costs.