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    Question

    Which of the following statements about a Ceding

    Company in insurance is true?
    A A Ceding company assumes the risk from another insurance company. Correct Answer Incorrect Answer
    B A Ceding company receives a commission from the Reinsurer for assuming the risk. Correct Answer Incorrect Answer
    C A Ceding company receives a premium from the Reinsurer to transfer the risk. Correct Answer Incorrect Answer
    D A Ceding company do not share the premium it receives from the policyholders. Correct Answer Incorrect Answer
    E A Ceding company retains all the risk and does not involve any other pary. Correct Answer Incorrect Answer

    Solution

    Explanation: A Ceding company is an insurance company that transfers part or all of the risk it has assumed to another insurance company called the Reinsurer. In return for transferring the risk, the Ceding company receives a commission from the Reinsurer, which compensates the Ceding company for getting the business and sharing the premium amount received to cover the risk.

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