Which of the following is a key characteristic of reinsurance?

Reinsurance is primarily a form of risk management utilized by insurance companies to protect themselves against significant losses. By transferring a portion of their risk to another insurer, typically referred to as the reinsurer, insurance companies can mitigate the financial impact of large claims or catastrophic events. This mechanism allows them to maintain solvency and protect their policyholders' interests, ensuring that they can meet their obligations.

In contrast, policies designed for individual consumers refer to coverages like auto or home insurance, which do not capture the essence of reinsurance. The concept of additional charges for higher premiums does not relate to how reinsurance operates; rather, it signifies consumer-level pricing adjustments rather than industry-level risk management. Lastly, the idea of lowering the quality of coverage is contrary to reinsurance's purpose since it aims to enhance a primary insurer’s financial stability and capability to pay out claims, rather than diminish the quality or available coverage for policyholders.