Question

What is the main purpose of securitization in the insurance market?

a.

To remove credit risk for policyholders

b.

To increase coupon rates for investors

c.

To convert underlying assets into securities

d.

To overcome capacity constraints for natural catastrophe risks

Answer: (d).To overcome capacity constraints for natural catastrophe risks Explanation:Securitization in the insurance market aims to overcome capacity constraints for natural catastrophe risks by securitizing catastrophe risk portfolios and placing them directly with investors in the form of securities.

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Q. What is the main purpose of securitization in the insurance market?

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