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    Question

    What is the purpose of "reinsurance"?

    A To transfer some of the insurer's risk to another insurer Correct Answer Incorrect Answer
    B To increase the premium income for the insurer Correct Answer Incorrect Answer
    C To reduce the number of claims received by the insurer Correct Answer Incorrect Answer
    D To avoid paying claims 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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