bstactThis article first provides a description of the development of securitization in the insurance sector. Details of the securitization process are also introduced. Meanwhile, the document explains the reason for requesting securitization by describing the experience in the insurance sector. Subsequently, it is illustrated how securitization is applied in the insurance sector. Furthermore, the document includes the comparison between reinsurance and securitization in three aspects. Finally, the advantages of securitization are concluded. Introduction Securitization is one of the most important innovations in the financial market. Compared to insurance and reinsurance, securitization has always been marginal in the past. Although the insurance industry in the United States possessed approximately four trillion dollars in assets with corresponding liabilities and equity capital that could be considered alternatives to securitization, securitization was still relatively slow in keeping pace with this industry. Securitizations in the US insurance industry were first used in 1988. They involved the sale of rights to profits emerging from blocks of life insurance policies and annuities (Millette, 2002). However, they developed rapidly due to massive loss events such as Hurricane Andrew in 1992, the global Trade Center terrorist attacks in 2001, and Hurricanes Katrina, Rita, and Wilma in 2005. (Cummins, 2009) Due to these disasters , traditional methods, such as reinsurance, exposure reduction and control of the most volatile part of the contractual obligation, are not sufficient to transfer the risk (Tynes, 2000). Obviously, reinsurers' assets have been seriously weakened. The common methods to recover business capabilities, and that shareholders of traditional insurance companies take risks and expect returns on the capital of their companies that correspond to the level of risk exposures taken, securitization, the alternative risk management solution , it must be more efficient when risk managers are willing to cover the risk at lower costs than using traditional insurance methods. Therefore, providing adequate returns to risk takers could be a better way to encourage the development of securitization, which will replace traditional insurance methods. In reality, securitization actually involves efficient risk distribution through lower costs and greater capacity. Furthermore, to keep securitization consistently attractive to investors, the potential for providing the necessary capacity for unhedged risk exposures should be gradually exploited.