Insurance policies allow people and businesses to limit their financial expenses in the event of an accident, illness, lawsuit or disaster. But how do insurance companies reduce their risks? Though a process known as reinsurance. When an insurance company sells a policy, it does so in hopes that it won't have to pay out more than the premiums paid by the policyholder. Reinsurance protects it in the event that payouts do exceed premiums. When a reinsurance company refused to pay an insurance company's claim, then reinsurance attorneys can work with the insurer to file a bad faith or breach of contract lawsuit. Because the reinsurance policy is between the insurer and the reinsurer, there are only limited instances can the original policyholder can file a claim against a reinsurer. If you or your business is an original policyholder, talk to a reinsurance lawyer to learn whether you have grounds for a suit against a reinsurance company.