Question

In what scenario does reinsurance help in checking the volatility of claim experience?

a.

When insurers underwrite few cases with low sum assured

b.

When insurers underwrite many cases with high sum assured

c.

When insurers experience high independence among risks

d.

When insurers experience high variance in claim costs

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (b).When insurers underwrite many cases with high sum assured Explanation:Reinsurance helps in checking the volatility of claim experience, particularly when insurers underwrite many cases with high sum assured, reducing the impact of individual large claims on overall claim costs.

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