Reinsurance allows ________ to reduce the risks of exposure by allocating a portion of the risk to ________ in exchange for a portion of the premium.

Question

Quizplus · Accepted Answer

Reinsurance allows insurance companies to transfer a portion of their risks to another insurance company in exchange for a portion of the premium. This helps in reducing the risks of exposure for the primary insurance company. Option B and D are incorrect as they mention the insured and a bank, respectively, which are not the primary entities involved in reinsurance. Option C is also incorrect as it suggests that the insured can transfer their risks to the insurance company, which is not the case in reinsurance.

Reinsurance Allows ________ to Reduce the Risks of Exposure by Allocating