Question

In what way does reinsurance enable higher risk acceptance by insurers?

a.

By increasing capital requirements

b.

By decreasing risk diversification

c.

By aggregating risks that insurers cannot manage alone

d.

By limiting the geographical scope of risks

Answer: (c).By aggregating risks that insurers cannot manage alone Explanation:Reinsurance allows insurers to accept higher risks by aggregating risks that insurers cannot manage alone, such as large concentrations of risks in specific geographical locations.

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Q. In what way does reinsurance enable higher risk acceptance by insurers?

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