It is an economic condition in which when companies are strengthened through mergers and/or acquisitions their combined economic risks are reduced. If each of these companies continues to operate separately, they will be less likely to default. In this way, all existing debt and tax burdens are shared among two or more parties, thereby reducing the cost of debt for merged businesses. In fact, if such a co-insurance effect occurs, the assets and liabilities of all parties involved in the merger or acquisition will be separated, and the credit risks and insurance risks will be minimized.

Co-insurance is a cost-sharing arrangement in health insurance where the insured pays a percentage of covered medical expenses after meeting their deductible. The effect of co-insurance is multifaceted:

1. Cost Sharing: It reduces the insurer's financial burden by distributing costs between the insurer and the insured.
2. Out-of-Pocket Costs: It increases the out-of-pocket expenses for the insured, which can impact their willingness to seek medical care.
3. Utilization: Higher co-insurance rates may discourage unnecessary medical visits and promote more cost-effective healthcare usage.
4. Financial Planning: Insured individuals must budget for potential healthcare expenses, fostering better financial planning.
5. Insurance Premiums: By mitigating the insurer's risk, co-insurance can help in keeping insurance premiums more stable and affordable.