Question

Why is retrocession an essential tool in the risk management process of reinsurers?

a.

To reduce their exposure to risk

b.

To increase their profits

c.

To improve their financial stability

d.

To all of the above

Answer: (a).To reduce their exposure to risk Explanation:Retrocession is a way for reinsurers to reduce their exposure to risk. By reinsuring part of their risk to another reinsurer, they can spread the risk out and reduce their potential losses.

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Q. Why is retrocession an essential tool in the risk management process of reinsurers?

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