Question

What is fronting in the context of insurance?

a.

A fraudulent practice by licensed insurers

b.

A legal arrangement for regulatory compliance

c.

An agreement between licensed and unlicensed insurers

d.

A method to bypass reinsurance requirements

Posted under IC85 Reinsurance Management

Answer: (b).A legal arrangement for regulatory compliance Explanation:Fronting refers to an arrangement where one licensed insurer issues a policy on a risk for and at the request of one or more other unlicensed insurers with the intention of passing the entire risk through reinsurance to the other insurer(s). Fronting is legal as long as the purpose is to comply with regulatory requirements.

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Q. What is fronting in the context of insurance?
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