Question

What is the primary purpose of reinsurance?

a.

To spread risks amongst the community of insurers

b.

To reduce the cost of reinsuring

c.

To ensure adequate cover for the gross account

d.

To generate good reciprocal inward business

Answer: (a).To spread risks amongst the community of insurers Explanation:The very purpose of reinsurance is to spread risks amongst the community of insurers who can then support each other in bad times. Therefore, the primary purpose of reinsurance is to spread risks amongst the community of insurers.

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Q. What is the primary purpose of reinsurance?

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