First of all, yes. Insurance companies actually do insure other insurance companies. Reinsurance companies insure insurance companies, and retrocession insurance companies insure reinsurance companies. Sounds pretty messy, huh? This is actually usually a very effective way for insurance companies to manage their risks. They pass some of it off to other insurance companies so that if there is a huge claim filed, they won't go bankrupt trying to pay it off.
There are many exceptions to the rules, but usually, a reinsurance company can't tell your insurance company what to do when it comes to paying out your claim. When they entered into an agreement with your insurance company, there was an understanding that if your insurance company is acting in good faith and doing everything legally, the reinsurance company can't deny a claim or make you settle for less money. However, if the reinsurance company is pushing back, your insurance company may have done something wrong. Issues can arise if the reinsurance agency feels your insurance company's decision making process was fraudulent, made in bad faith, or that the underlying claim was not within the scope of the reinsurance coverage. It could run even deeper if it's the reinsurance company going against the terms of their contact with the retrocession insurance company.
The bottom line is that something fishy is happening and you should not accept your denied claim. The Voss Law Firm, P.C. can speak with you how to dispute an insurance denial and the steps you need to take to get a fair pay-out. Contact a Texas insurance claim attorney today at 888-614-7730 or request a free copy of our book, Top 10 Mistakes You Cannot Afford To Make When Filing Your Insurance Claim.