Question

Which principle states that the reinsurance contract is based on the concept of indemnity?

a.

Principle of utmost good faith

b.

Principle of indemnity

c.

Principle of insurable interest

d.

Principle of public needs

Answer: (b).Principle of indemnity Explanation:The principle of indemnity, applicable to the reinsurance contract, means that the reinsured is entitled to be indemnified for the actual loss suffered. While this principle may not necessarily apply to the original insurance contract, it is fundamental to the reinsurance agreement.

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Q. Which principle states that the reinsurance contract is based on the concept of indemnity?

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