Answer-What is the purpose of 'reinsurance'?

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

Question

What is the purpose of "reinsurance"?

A To transfer some of the insurer's risk to another insurer

B To increase the premium income for the insurer

C To reduce the number of claims received by the insurer

D To avoid paying claims

E None of the above

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What is the purpose of "reinsurance"?

Solution