Question

What is the advantage of reinsurance for new insurance markets?

a.

Local investors often prefer more lucrative short-term activities than insurance

b.

New markets have a small volume of premium and low retention capacity

c.

New markets can make extensive use of reinsurance

d.

both b and c

Posted under IC85 Reinsurance Management

Answer: (d).both b and c Explanation:Local companies in new markets often have a smaller financial base because local investors often prefer more lucrative short-term activities than insurance. Moreover, new markets have a small volume of premium and low retention capacity, and they make extensive use of reinsurance.

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