Question

How does reinsurance assist in minimizing new business strain for insurers?

a.

By reducing initial commissions

b.

By extending financial support

c.

By increasing capital strain

d.

By limiting new product offerings

Answer: (b).By extending financial support Explanation:Reinsurance minimizes new business strain for insurers by providing financial support, often through high initial commissions paid by reinsurers to insurers, thereby reducing the strain on capital when writing new products.

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Q. How does reinsurance assist in minimizing new business strain for insurers?

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