Summaries

Question 1

Define Reinsurance.

Answer 1

Reinsurance involves a direct-writing company ceding business to another insurance company, the reinsurer. The reinsurer will have no contact with the policyholders.

Question 2

State the main reasons for reinsurance

Answer 2

The main reasons for reinsurance are that it might: ●
● ● ● ● ●
limit exposure to risk avoid large single losses
smooth results provide expertise increase capacity to accept risk
provide financial assistance