Question

What is the primary objective of reinsurance?

a.

To reduce the company's probability of ruin

b.

To stabilize any fluctuation in the insurer's annual aggregate claims experience

c.

To allow an insurer to accept risks beyond its normal retention and not be placed at a serious disadvantage compared to its competitors

d.

All of the above

Answer: (d).All of the above Explanation:The primary objectives of reinsurance are to reduce the company's probability of ruin, stabilize fluctuations in claims experience, and allow the insurer to accept risks beyond its normal retention to compete with its competitors.

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Q. What is the primary objective of reinsurance?

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