What is the difference between insurance and reinsurance? Insurance and reinsurance provide financial protection to a person or entity. For your protection against risk. Both insurance and reinsurance allow the transfer of a possible loss from one entity to another. In exchange for a financial payment in the form of a premium. Each of these has the function of managing risk, however, the risk is spread in different ways.

Insurance is a tool used by people to manage risk. The insurance companies sell individual insurance policies. And these are geared to protect against financial loss.

In return, a person pays the insurance company a fee (premium) for the policy. This is used as a promise that the insurance company agrees to reimburse the policyholder (insured ) for their financial loss. This must result from a disaster or some other circumstance that leads to a loss of life or property that the policy is covering.


In turn, reinsurance is understood as a tool used to manage risk. Unlike insurance that protects individuals from financial loss. Reinsurance protects the insurance company from financial loss.

It grants protection insurance to the company with the spread of risk among various insurance companies. They agree to protect the policies sold by a company.

The foregoing translates to an insurance company being able to cover more people without fear of incurring significant financial losses in the event of a disaster. Resulting in multiple claims from policyholders at the same time.


Coinsurance and Reinsurance are elements of policy contracts that in many cases are difficult to understand for the bulk of the insured. And that can cause certain casuistry about how the money they are investing is handled. It is for this reason that it is advisable to clarify what each one consists of. The way to carry out is via comparative.

First of all, we must be clear about what these concepts are. In this case, Coinsurance is related to the way of contracting protection for high-cost claims. It is characterized by buying coverage where various insurance companies share the responsibility to indemnify a risk if necessary.

While on the Reinsurance side. Reinsurance is understood as the technical risk transfer instrument used by insurance companies. To transfer a claim to another institution and at the same time protect itself from the risks assumed. At the moment, they pose a threat to your finances.

In short, reinsurance is a contract between the insurer and another entity that is not affected by the insured. In co-insurance, other insurance coverage is part of the risk and responds directly to the insured.

What are insurance and intermediary entities?

Insurance entities can be classified according to their legal constitution: joint-stock companies, mutuals, cooperatives, and mutual benefit societies. These social forms are those legally recognized in Spain to carry out the insurance activity. However, these have essential characteristics in common for marketing insurance.

Insurance entities can operate in one or multiple areas (accidents, automobiles, fire, civil liability, etc.). But always with the necessary authorization from the regulatory body.

The classification by branches is necessary to order the risks. Separating them into groups with common characters so that their treatment and assessment are appropriate. For greater precision, sectors are often re-divided into modalities that include related risks.

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