Question

What is the term for insurance purchased by an insurance company directly from one or more insurance companies or through a broker for the purpose of risk management?

A Retrocession Correct Answer Incorrect Answer
B Subrogation Correct Answer Incorrect Answer
C Co-insurance Correct Answer Incorrect Answer
D Reinsurance Correct Answer Incorrect Answer
E Underwriting Correct Answer Incorrect Answer

Solution

Reinsurance, often called "insurance for insurance companies," results from a contract between a reinsurer and an insurer. In it, the insurance company—known as the ceding party or cedent—transfers some of its insured risk to the reinsurance company.

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