Question

Why is financial stability important for insurers?

a.

To manage and regulate their affairs in a manner that no nasty surprises by way of large losses endanger their financial stability

b.

To absorb the impact of fluctuations caused by inadequate spread of risks, unexpected weather conditions, social/economic developments, and new technology risks

c.

To achieve a premium spread over several years and be seen in the eyes of their insured as financially stable

d.

Both a and b

Posted under IC85 Reinsurance Management

Answer: (d).Both a and b Explanation:Financial stability is important for insurers to manage and regulate their affairs in a manner that no nasty surprises by way of large losses endanger their financial stability, and to absorb the impact of fluctuations caused by inadequate spread of risks, unexpected weather conditions, social/economic developments, and new technology risks.

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