What is the difference between a policy and a contract of reinsurance?

A policy and a contract of reinsurance have different functions in Indiana insurance law. A policy is a written agreement between an insurance company and the insured, setting out the terms of the insurance coverage. The policy outlines the type and amount of coverage provided by the insurer, as well as the premiums to be paid. It also outlines any exclusions, limitations, and conditions associated with the policy. A contract of reinsurance, on the other hand, is an agreement between two insurance companies. It is used by one insurer, known as the ceding insurer, when it is unable to take on all of the risk associated with a particular policy and transfers a portion of the risk to a second insurer, known as the assuming insurer. Generally, the ceding insurer will retain a portion of the risk for itself and will receive a portion of the premiums collected by the assuming insurer. The contract of reinsurance may also provide additional coverage for the ceding insurer in the event of a claim. In summary, a policy is an agreement between an insurer and the insured that sets out the terms of the insurance coverage. A contract of reinsurance, on the other hand, is an agreement between two insurers that allows for the transfer of a portion of the risk from one insurer to another.

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What is the difference between a policy and a contract of reinsurance?

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