What is the difference between coinsurance and reinsurance?
some risks may be too large for one Insurer. The latter may therefore consider sharing this risk with other Insurers. This is called coinsurance. On the other hand, Insurers may wish to quantify and limit the amount of claims they may have to pay out. To do this, they may take out excess of loss reinsurance whereby any claim exceeding a set amount will be limited to this set amount, any amount exceeding this limit being paid by reinsurers. 4.
