The insurance world has its own set of rules and regulations. Reinsurers, however, are in an even more specialized industry and have other rules to worry about. If you aren't familiar, reinsurance is, in its most basic form, insurance for insurance companies. It is especially common in areas that are prone to large natural disasters because it allows insurance companies to minimize their risks by passing some of it on to a reinsurer. There are even retrocession insurance companies and they take on some of the risk from the reinsurers.
The term "Follow the Fortunes" relates to the relationship between the reinsurer and the reinsured. If the original insurance company pays out a claim reasonably and in good faith, the reinsurance company doesn't have the right to contest the pay-out. They have to trust that the reinsured made the right decision and in turn, pay the amount the reinsured determined is fair. This doctrine is important because without it, the entire reinsurance process could get very messy. Can you imagine how frustrating it would be if an insurance company investigated a claim and then the reinsurance company investigated the same claim afterward? There is a good chance that the reinsurer's investigation would not be as thorough as the insurance company's because they do not have a direct relationship with the person filing the initial claim.
Reinsurance and retrocession insurance companies play a very important role in keeping smaller insurance companies afloat. Unfortunately, adding those layers can also make things messy as well. If you are having trouble with your insurance company and are confused and upset about your denied claim or wrongful delay of payment, contact the Texas insurance claim lawyers at The Voss Law Firm, P.C. today at 888-614-7730.
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