Assumption Reinsurance

Assumption Reinsurance

Assumption reinsurance occurs when a company or some party takes over the insurance contract between an insurer and an insured party and assumes the responsibility of the insurer.  That is to say that once another party or company takes over a contract, they must now fulfill the duty of the prior insurer.  In most cases the insured person will be notified and will by some means give consent to this change, whether the consent is written or implied when the insured party is informed of the transfer.  

Does the Insurer Have to Notify the Insured?

This is an almost definite yes.  There are few exceptions, if any, to this.  If the contract changes hands and someone else assumes the contract and thus the responsibilities, the insured must be notified, as is the case with any changes.  While many companies reserve the right to change/alter contracts and can have contracts taken over by other companies, as is the case in mergers or take overs, they must inform the inured party of the changes and in most cases.  This does not mean, however, that companies can transfer insurance contracts without the insured persons consent.  For more specific details, please contact your insurer.

Does the Reinsurer Have to Follow the Same Contract?

Yes, absolutely.  When insurance is assumed by another party, they take on all of the prior responsibilities of the old insurer.  When they take the contract, they must then abide by it, just as the previous insurance company did. The whole idea of a contract being assumed is that the person who is insured isn't the only thing transfered, but the contract that they had, is also transfered.  So all of the old terms of the contract still apply, but the new owner of the contract has to fulfill the terms and conditions that apply to it.  It is now, essentially, the previous insurance company with new management.  If you still have questions, please contact your insurer.  If you feel you have a good grasp, it is still recommended that you contact your insurance company with any questions you may have.