What is the difference between direct and indirect insurance?

Direct insurance and indirect insurance both involve insurance policies, but there are significant differences between the two. Direct insurance refers to when an insurance company directly contracts with a policyholder for insurance coverage. This is the most common type of insurance because it is relatively simple for the insurance company to create a contract with the policyholder and provide the agreed-upon coverage. In this case, all information regarding the policy is between the policyholder and the insurance company. Indirect insurance, also known as reinsurance, is when a policyholder pays a premium to a broker for insurance coverage, and the broker then contracts with an insurance company to provide the agreed-upon coverage. The insurance company is essentially the middleman between the policyholder and the broker and does not have any contact directly with the policyholder. This type of insurance is often used when a policyholder is looking for coverage that is outside of what a direct insurer can provide. In summary, direct insurance is a contract between the policyholder and the insurance company, whereas indirect insurance is a contract between the broker and the policyholder with the insurance company acting as the middleman. While they both involve insurance policies, the difference is in the practice of how the policy is acquired and how payments are made.

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What is the difference between direct and indirect insurance?

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