Reinsurance is insurance purchased by insurers from other insurers to limit the total loss an insurer would experience in case of a disaster.

Question

Quizplus · Accepted Answer

This statement is true. Reinsurance is a way for insurers to transfer some of the risk they take on to other insurers. In case of a disaster or large loss, the reinsurer would pay some or all of the costs, limiting the amount the primary insurer would have to pay out of its own reserves.

Reinsurance Is Insurance Purchased by Insurers from Other Insurers to Limit