June 2, 2025
What Is the Difference Between Insurance and Reinsurance?
We fight insurance disputes for everyday Texans. Houston insurance litigator Mark Callender and coverage lawyer Josh Bowlin lead our trial-ready team at CB Trial, just off San Felipe near the I-10 and West Loop.
We have secured policy benefits for families in The Heights after burst-pipe freezes, entrepreneurs in Montrose facing business interruption losses, and homeowners in Katy wiped out by hurricane winds. Our clients hear “we pay” long before they hear “we deny,” because we press carriers to honor every promise.
Call our Houston insurance coverage attorneys, Mark Callender and Josh Bowlin, at (713) 300-8700 for a free, same-day case evaluation.
What Is Insurance?
Insurance is a private contract that transfers a specific risk from you to a licensed carrier in exchange for premiums.
A policyholder pays money now so the insurer covers a loss later, fire damage to a Galleria townhome, collision repairs after a crash on the Gulf Freeway, or medical bills under a health plan.
Coverage applies up to stated limits and only for perils named in the policy; everything else is an exclusion or endorsement. Because Texas leads the nation in billion-dollar weather disasters, carrying robust insurance is not a luxury. It is survival.
What Is Reinsurance?
Reinsurance is insurance purchased by insurance companies to protect their own solvency.
When a carrier underwrites a $100 million refinery or a statewide homeowner pool, it “cedes” part of that risk to a reinsurer that promises reimbursement above a set threshold.
Key players include the ceding insurer, the reinsurer, and sometimes a retrocessionaire (a reinsurer of a reinsurer). Without this back-stop, one hurricane like Harvey could bankrupt a single company overnight.
Key Differences Between Insurance and Reinsurance
Insurance shields the policyholder; reinsurance shields the insurer. Your contract names only the carrier, so you cannot sue Swiss Re or Munich Re if your roof claim stalls.
Claims duties differ too: insurers owe you good-faith investigation, while reinsurers owe only contractual “follow-the-fortunes” cooperation with the cedent. Finally, insurance pricing reflects individual risk, whereas reinsurance pricing reflects aggregate catastrophe modeling across continents.
Why Insurers Rely on Reinsurance
Reinsurance spreads extreme losses so no carrier collapses under a single event. By ceding shares of mega-risks, insurers free capital to keep writing standard home and auto policies in Sugar Land and Cypress.
This safety net stabilizes the whole market, holds down consumer premiums, and satisfies Texas Department of Insurance solvency rules. In short, reinsurance keeps your local insurer open for business after the next Gulf storm.
How Reinsurance Can Influence Your Claim
Most policyholders never notice reinsurance, but it can shape large-loss strategy behind the scenes.
If your Greenway Plaza office tower suffers a $40 million fire, the insurer may consult reinsurers before paying, prolonging document requests or reserving rights. Our Houston insurance attorneys at CB Trial monitor these dynamics, push carriers to honor coverage promptly, and, when needed, prepare to arbitrate cedent–reinsurer friction that could delay your recovery.
Legal Issues We Litigate
Coverage disputes erupt when carriers deny, delay, or undervalue claims. Common battles include breach of contract, misrepresentation in underwriting, late-notice defenses, appraisal clause fights, and statutory bad faith.
Reinsurance conflicts center on the allocation of losses, “follow-the-settlements” disagreements, commutations, collateral calls, and runoff accounting. We represent policyholders in the front-end fight and, on select matters, counsel carriers tangled in back-end reinsurance arbitrations, all to ensure injured Texans are ultimately made whole.
Common and Uncommon Case Types We Handle
Everyday losses we see:
- Hurricane wind and flood damage in Galveston County
- Hail-pocked roofs across Fort Bend
- Business interruption claims for restaurants on Washington Avenue
- Auto liability coverage after 18-wheeler wrecks on I-45
- Builder’s-risk disputes for Midtown remodels
Less-frequent but high-stakes problems:
- Cyber-breach liability and data-loss reinsurance layers
- Environmental contamination of Gulf marshlands triggering multi-carrier towers
- Directors-and-officers exposure tied to SPAC litigation
- Catastrophic product-liability recalls requiring excess-of-loss reinsurance response
- Surety bond failures on billion-dollar LNG export facilities
Texas Insurance & Reinsurance Law Basics
Texas Insurance Code Chapters 541 and 542 police unfair settlement practices and prompt payment. The Department of Insurance sets collateral, licensing, and credit-for-reinsurance standards adapted from NAIC model acts.
Statutes give you two years to sue for contract breach and may award 18 percent interest plus attorney fees if a claim is withheld in bad faith. Knowing these rules lets our attorneys file in Harris County or Southern District federal court and demand every statutory remedy available.
Why Choose CB Trial for an Insurance or Reinsurance Dispute?
We are courtroom lawyers first, negotiators second. Houston insurance coverage attorney Josh Bowlin has deposed reinsurer executives on billion-dollar catastrophe pools.
Mark Callender, Houston reinsurance lawyer, has tried first-party windstorm cases to verdicts that forced carriers to rewrite policy language statewide. Clients appreciate our compassion after loss and our relentlessness in litigation. We advance costs, charge no fee unless we win, and keep you informed at every step.
Take the Next Step Toward Compensation
Time limits run fast after a denial letter. Call (713) 300-8700 or send us a message today for a free, same-day case evaluation with a Houston insurance dispute attorney at CB Trial. Let us shoulder the legal burden so you can rebuild, recover, and move forward.
