Question

Why do insurance companies engage in reinsurance?

a.

To avoid issuing policies

b.

To reduce premiums for policyholders

c.

To share risk and prevent financial losses

d.

To monopolize the insurance market

Answer: (c).To share risk and prevent financial losses Explanation:Insurance companies engage in reinsurance to share risk with other insurers, preventing financial losses and maintaining solvency.

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Q. Why do insurance companies engage in reinsurance?

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