Difference between double insurance and reinsurance

Main difference

The main difference between double insurance and reinsurance is that double insurance is a situation where the same risk is insuring more than once, while reinsurance is the situation where the insurer transfers the same opportunity to another company. insurance.

Double insurance vs. reinsurance

Double insurance is a form of such insurance, in which the individual or corporation insures a specific property with more than one insurer or with the numerous strategies of the similar insurer, while reinsurance, is a form of such insurance in which the same The risk in the policies is transferred by the insurance company, to guarantee the same procedures with another insurer. The advantage of double insurance is that double insurance can be required by all insurers, while the benefit of reinsurance is that reinsurance can only be claimed by the actual insurer who is going to apply for reinsurance.

The main purpose of double insurance is to pledge insurance profits, while the main use of reinsurance is to lessen the insurer’s risk. The double insurance policy focuses on the property, while the reinsurance policy focuses on the actual risk of the insurer. In the case of double insurance, the loss is shared by all the insurers of the protection amount, while in the case of reinsurance, the damage is shared by all the reinsurers of the reinsurance amount. Double insurance is concerned with insurable interests, while reinsurance is not concerned with protection.

In the case of double insurance, the insurance contract is necessary to make the protection possible, while in the case of reinsurance, the coverage contract is not necessary to make the protection possible.

Comparison chart
double insurance Reinsurance
Double insurance is the situation where the same risk is insuring more than once. Reinsurance is the situation where the insurer transfers an equal opportunity to another insurance company.
claimed by
all insurers original insurer
Target
Guarantee the benefit of the insurance. Reduce the risk of an insurer.
concentrating on
Property royal risk
Penalty fee
Shared by all insurers Shared by all reinsurers
interested in insurance
Yes No
Insurance contract
necessary There’s no need

What is double insurance?

Double insurance is a form of such insurance, in which the singular or establishment declares explicit possession with more than one guarantor or with the various strategies of the similar insurer. The advantage of double insurance is that all insurers can require double insurance, and the main purpose of double insurance is to promise the insurance benefit. The dual insurance policy focuses on the property. In the case of double insurance, the loss is shared by all insurers of the amount of protection.

Double insurance is a type of insurance in which the same subject is insured more than once. The double insurance method is to consider a legal act, and in the case of damage, the insured may be declaring from both insurers. Insurers are responsible for compensation according to their relevant rules. Double insurance is interested in insurable interests. In the case of double insurance, the insurance contract is necessary. The insured can privilege the amount of the proceedings and the insurer cannot claim the amount more than the actual loss.

Double insurance also tracks elementary insurance values. Double insurance only arises when a large part of the same risk is protected by both insurances. The strategies also hide the same importance. There can be no double insurance without the time of the loss, and the insured can improve the total amount of his damage by the insurer.

What is reinsurance?

Reinsurance is a type of insurance in which a similar risk in plans is being passed on by an insurance company to insure the same policies with another insurer. The positive point of reinsurance is that reinsurance is only required by the actual insurer who is working to apply for reinsurance. The reinsurance procedure emphasizes the real risk of the insurer. In the case of reinsurance, the loss is distributed by all the reinsurers of the total reinsurance. Reinsurance does not have a compelling interest in insurance.

Reinsurance arises when various insurance companies segment risk by obtaining insurance policies from other insurers to consolidate their specific full loss in the event of any tragedy. The main objective of reinsurance is to reduce the risk of the insurer.

There are some kinds of reinsurance; the first is treaty reinsurance; This type of reinsurance generally covers all current and existing policies until the contract expires or is cancelled. The second is facultative reinsurance, this type of reinsurance covers individual risk, rather than group policies as a treaty, and is transferable on a procedure by procedure basis, meanwhile, treaty policies are requiring signature by all parties of a contract. contract. The third is proportional; it is allowing the main company and the reinsurers to share the payments and possible losses. The fourth is not proportional; In this case, the lead company recalls an absolute risk and gives the reinsurer an amount of coverage. It is usually applied only in tragic circumstances.

Key differences
  1. In double insurance, the same situation is insuring more than once, while in reinsurance, the same risk is insured by another person.
  2. Double insurance focuses on property; on the other hand, reinsurance focuses on actual risk.
  3. Double insurance is claimed by all insurers; conversely, reinsurance is claimed by the actual insurer.
  4. The purpose of double insurance is to promise the benefit of protection; On the other hand, the objective of reinsurance is to reduce the risk of the insurer.
  5. In double insurance, the loss is shared by all insurers; in contrast, in reinsurance, the damage is shared by all reinsurers.
  6. The insurance contract requires double protection; On the other hand, the insurance contract does not need reinsurance.

Final Thoughts

Double insurance and reinsurance sound the same, but they are both different in a certain way. Double insurance is contracted by the insured. Instead, reinsurance is a contract between two guarantors, to protect a part of the danger, and reinsurance is a participant by the insurer.

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