What does assumption of liability agreement mean?

assumption of liability agreement meaning in Insurance Dictionary

A separate agreement between a company designated as reinsurer and a policy-issuing company entered into when it comes to advantage of a guaranteed. It will make the reinsurer straight prone to the insured in the case of the insolvency of issuing organization. The reinsurer typically is a licensed company into the says where the insured requires coverage, this provides you with insureds usage of an insurer that's susceptible to state regulation. Another important provision specifies the contract takes precedence over every other reinsurance agreements or arrangements between the reinsurer together with main insurer. These agreements are almost always made between affiliated insurers.