Question

Which of the following is NOT an advantage of reinsurance arrangements?

a.

Minimizing losses

b.

Innovation

c.

Increase in capital requirements

d.

Freeing up of reserves

Posted under IC22 Life Insurance Underwriting

Answer: (c).Increase in capital requirements Explanation:Reinsurance arrangements can help in reducing the amount of reserves that must necessarily be held by an insurance company, thus freeing up capital for new business. Therefore, increase in capital requirements is not an advantage of reinsurance arrangements.

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Q. Which of the following is NOT an advantage of reinsurance arrangements?
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