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    Question

    What is the primary purpose of reinsurance?

    A To increase the insurer's risk exposure Correct Answer Incorrect Answer
    B To reduce the insurer's risk exposure Correct Answer Incorrect Answer
    C To diversify the insurer's investment portfolio Correct Answer Incorrect Answer
    D To increase the insurer's premium income Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Reinsurance is a mechanism where insurers transfer a portion of their risk to other insurers (reinsurers) to protect themselves from large or catastrophic losses.

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