When purchasing insurance a contract is entered in which the insured party transfers a risk, or part of it, to a third party (insurance company) in exchange of the payment of an amount of money known as premium or due. The insurance company taking the risk carries the responsibility of paying for the losses or indemnifying the damage or loss resulting from the happening of the risk. An insurance product is an instrument that meets the protection needs of human beings.

The purpose of insurance, in general terms, is to offer protection against harmful probable events to which human beings, their activities, assets and lives are exposed. Insurance is an important element in the economy of people, companies, sectors and countries. It avoids an economic unbalance by compensating or covering the damages or losses.

From the legal standpoint, reinsurance is an agreement of wills in which the reinsured (direct insurer) transfers to a reinsurer one or more risks previously accepted, in exchange of the payment of a premium.

Risks must always be taken into consideration. Risk is defined as the sudden, unexpected potential loss of benefits or wellbeing caused by an adverse event. This term is usually considered negative as it is related to damages and losses. However, it is a topic that must be seriously analyzed in any businesses.

Insurance and Reinsurance

Insurance is an agreement or contract with which the insured party transfers the risk to a third party (an insurance company) in exchange of an amount of money paid as premium or due. The insurance company taking the risk also carries the responsibility of compensating and indemnifying the loss or damage caused when the risk is realized. The above explains why an insurance contract is an instrument that meets the protection needs of all human beings.

From the legal standpoint, reinsurance is a contract or agreement in which the reinsured party (direct insurer) transfers to a reinsurance company the risk, in part or as a whole, originally accepted, in exchange for the payment of a premium.

Farming Risks

Risk is defined as the sudden, unexpected potential loss of benefits or wellbeing caused by an adverse event. This term is usually considered negative as it is related to damages and losses. This topic shall always be taking into consideration in any businesses.

Insurance Funds

An insurance fund is an association of Mexican agricultural and/or cattle farmers with residence at the rural sector with the purpose of helping each other with insurance and reinsurance operations.

More information about the insurance funds:

• What is an Insurance Fund?
• How does ip operate?
• Incorporation Process

Legal Framework

This section includes the standards and regulations applicable to the incorporation and creation of insurance funds, which have the following goals:

• Foster, promote and facilitate reinsurance services offered by Agricultural and Cattle Farming Rural Funds.

• Regulate the activities and operations that these funds shall be able to carry out.

• Set out the Technical Assistance and Follow up of Operations mechanisms to be offered in order to have an equal and healthy development.