Question

How does reinsurance help in ensuring financial stability for insurers?

a.

By reducing the number of claims

b.

By increasing premium rates

c.

By paying the reinsured portion of the loss

d.

By denying claims

Posted under IC85 Reinsurance Management

Answer: (c).By paying the reinsured portion of the loss Explanation:Reinsurance provides financial stability to insurers by paying the reinsured portion of the loss in the event of large losses or a single event capable of producing a claim or series of claims of very high magnitude through accumulation.

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