The difference between insurance transfer and non-insurance transfer

Insurance transfer and non-insurance transfer are two commonly used methods in risk management. This paper will discuss the difference between insurance transfer and non-insurance transfer from different angles.

Cost problem

Non-insurance transfer generally has to pay a certain price, and sometimes the cost of transferring risk may exceed the actual loss, which is unfavorable to the transferor.

Contract constraint

The medium of non-insurance transfer is contract, and the transfer may fail because of the differences in understanding of the terms of the contract between the two parties.

superiority

The advantages of non-insurance transfer are as follows: first, it can transfer some uninsurable potential losses, such as the increase in investment caused by rising prices, changes in laws and regulations, and design changes; Second, the transferee can often control the losses better, for example, the construction unit can better grasp the technical risks of construction compared with the construction unit, and the professional subcontractor can better complete the professional engineering content compared with the general contractor.

Bear the loss

In some cases, because the transferee is unable to bear the actual heavy losses, non-insurance transfer may still be borne by the transferor.