Fun fact about the insurance industry that many people don’t know. 

Most insurance companies do not own 100% of the liability of the policies they insure. 

For large policies, they commonly add a layer of what is called reinsurance. 

A very simple example with random numbers: Say a property in California is insured for $20M. The primary insurer will call the reinsurance company and say, if we cover the first $10M will you cover the second $10M. The property owner pays the premium to the insurer and the insurer pays a premium to the reinsurer. 

Sometimes there can be more than two layers and there are even more complicated policies types than this.