Property insurance companies protect themselves against the extensive damage caused by hurricanes and earthquakes by:

Question

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Property insurance companies protect themselves against the extensive damage caused by hurricanes and earthquakes by buying reinsurance against such catastrophes. This means that they transfer a portion of their risk to a reinsurance company, which would bear the burden of paying claims in the event of a catastrophic loss. This allows the property insurance company to reduce its exposure to risk and maintain its financial stability. Options A and B are not effective solutions to hedge against catastrophic losses, and option D is unethical and illegal.

Property Insurance Companies Protect Themselves Against the Extensive Damage Caused