Insurance & Reinsurance
Difference Between Insurance and Reinsurance
Insurance and reinsurance in Florida are both tools that guard owners against financial risks. The risks are transferred from one entity to another in exchange for a payment known as premium. When Insurance policies are often purchased by individuals, reinsurance occurs when more than one insurance companies come together to share risk by buying insurance policies from other insurers or brokers. This is usually done in order to limit the overall loss the original insurer would experience in the event of any unforeseen disaster.
Insurance and reinsurance are quite different. These forms of financial risk management have various differences in terms of how they are used. Here, we take a look at some of the differences between both forms of financial risk management.
Insurance and reinsurance are both financial protection tools. Insurance is a financial loss protection bought by an individual from an insurance company while reinsurance is an insurance bought by an insurance company from another insurance company to manage their risks.
Insurance has lots of policies that an individual /entity can purchase to secure itself from financial loss. These include but not limited to life insurance, health insurance, and auto insurance. Reinsurance offers a specific type of policy. The product is purchased by an insurance company to guard it against financial loss by transferring the risk to various companies.
The premium paid for an insurance policy goes directly to the insurance company that is providing this policy. The premium paid by an insurance holder for reinsurance is shared with all the insurance companies in the risk portfolio.
Insurance Provider Location
Insurance is bought from an insurance company permitted to offer policies in one state. Reinsurance can be bought from insurance companies operating within and outside a state.
Insurance is purchased by individuals to guard themselves against financial loses. Reinsurance is taken up by large insurance companies to prevent any financial by sharing the risk with other insurance companies.
Insurance allows individuals to avoid financial risk after damage to property or health. Reinsurance prevents insurance companies from becoming bankrupt after a wide insurance claim by insurance holders.
Entity Risk Is Conferred To
The responsibility of reimbursing a policyholder after for his financial loss after a disaster lies on the shoulders of an insurance company. Reinsurance involves many insurance companies coming together to provide a hedge against financial loss to another insurance company.
There you have it! The above are a couple of differences between insurance and reinsurance. While insurance helps in providing adequate coverage for an individual’s life or property after a disaster, reinsurance ensure that a single insurance company does not have to bear all the risk involved.
Looking for Reinsurance in Florida?
Are you in need of Florida Reinsurance? Contact us today at Oros Risk Solutions. We have the ideal Florida reinsurance policy for your company. We are here to ensure that you do not have to bear all the burden of an insurance claim on your own. We guarantee you excellent services.