Question

What is a primary consideration for insurers before reinsuring?

a.

Maximizing profits

b.

Minimizing capital requirements

c.

Evaluating the cost of reinsurance

d.

Ignoring risk reduction

Answer: (c).Evaluating the cost of reinsurance Explanation:Insurers should evaluate the cost of reinsurance, considering the reinsurer's profit, cost of capital, and expenses, as it impacts the expected absolute level of profit for the insurer.

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Q. What is a primary consideration for insurers before reinsuring?

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