Question

What is catastrophe reinsurance?

a.

Reinsurance for protecting insurance companies against large mortality claims coming at a single point of time

b.

Reinsurance for protecting insurance companies against natural disasters like tsunamis, earthquakes, volcanoes, etc.

c.

Reinsurance for protecting insurance companies against wars and conflicts.

d.

Reinsurance for protecting insurance companies against liability claims.

Posted under IC22 Life Insurance Underwriting

Answer: (a).Reinsurance for protecting insurance companies against large mortality claims coming at a single point of time Explanation:Catastrophe reinsurance is a type of reinsurance that helps insurance companies protect themselves against large and unexpected losses resulting from catastrophic events, such as natural disasters or terrorist attacks. Its primary purpose is to limit the exposure of the insurance company to such catastrophic events and to ensure that it has sufficient financial resources to meet its obligations to policyholders in the event of a major disaster. Catastrophe reinsurance generally covers mortality risks due to natural disasters like hurricanes, earthquakes, floods, etc., but may exclude risks due to wars or conflicts.

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