18-66 Property-casualty insurance companies can reduce their exposure to liquidity risk by diversifying coverage across different types of disasters.

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Diversifying coverage across different types of disasters can help property-casualty insurance companies to reduce their exposure to liquidity risk. By spreading their coverage across different types of disasters, the risk is distributed, and potential losses due to any single event are minimized. This diversification approach enables the insurance companies to maintain their liquidity position and meet the claim payments as required.

18-66 Property-Casualty Insurance Companies Can Reduce Their Exposure to Liquidity