When a $1 million insured loss occurs and $300,000 of the loss is reinsured, the policy holder of the primary company will receive:

Question

Quizplus · Accepted Answer

The policyholder will receive $1 million from the primary company because the primary insurer is responsible for covering the full amount of the insured loss to the policyholder, regardless of any reinsurance arrangements. The reinsurance agreement is between the primary insurer and the reinsurer and does not directly involve the policyholder.

When a $1 Million Insured Loss Occurs and $300,000 of the Loss