Types of Insurance Policies
The terms of an insurance policy govern the roles of the Insurance Company and the other parties participating in the contract.
Insurance may be issued directly to a Policyholder in exchange for premium. An Insurance Company may assume risk from another Insurer that has ceded the coverage, and the Insurance Company becomes a Reinsurer in this transaction. An Insurance Company may also decide to cede all or a portion of its risks to a Reinsurer. A Reinsurer may choose to cede part or all of its risks to a different Reinsurer, called a Retrocedant, which assumes the coverage.
It’s very important to read the insurance policy and determine the roles of all parties named in the contract, as this governs which party pays premium and which party is responsible for paying claims.
