Reinsurance is used by insurance companies faced with:

Question

Quizplus · Accepted Answer

Reinsurance is primarily used by insurance companies to protect themselves against potential losses that are too large for them to handle. This helps them maintain their financial stability and avoid insolvency in the event of a major claim. As such, choice B, which refers to inadequate capital to handle a potential loss, is the best answer. While the other choices may also be reasons for using reinsurance, they are not as universal or as directly related to the need for risk transfer as inadequate capital.

Reinsurance Is Used by Insurance Companies Faced With