Question

What term describes the situation where an insurer remains liable to policyholders even if the reinsurer becomes insolvent?

a.

Reinsurance risk

b.

Counterparty risk

c.

Credit risk

d.

Legal risk

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (b).Counterparty risk Explanation:Counterparty risk refers to the situation where the insurer retains liability to policyholders even if the reinsurer becomes insolvent and unable to meet claim payments as they become due.

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Q. What term describes the situation where an insurer remains liable to policyholders even if the reinsurer becomes insolvent?
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