Insurance Awareness - Reinsurance
What is the main purpose of reinsurance for an insurer?
What is the main purpose of reinsurance for an insurer?
medium Q14 of 15
Step-by-Step Solution
Step 1: Understand reinsurance purpose
Reinsurance allows insurers to transfer part of their risk to reinsurers to reduce exposure and maintain solvency.Final Answer:
To transfer part of the risk to maintain solvency and financial stability → Option AQuick Check:
Reinsurance is a risk management tool, not a sales or regulatory function.
Quick Trick: Think: Reinsurance = risk sharing for stability.
Common Mistakes:
MISTAKES- Assuming reinsurance increases policyholders or regulates market.
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