Question

    Which of the following insurance contracts is likely to have a significant insurance risk component?

    A Warranty contract Correct Answer Incorrect Answer
    B Reinsurance contract Correct Answer Incorrect Answer
    C Catastrophe bond Correct Answer Incorrect Answer
    D Investment contract Correct Answer Incorrect Answer
    E Lease contract Correct Answer Incorrect Answer

    Solution

    Explanation: Catastrophe bonds are issued by insurance or reinsurance companies to transfer specific catastrophe-related risks to investors. These contracts typically have a significant insurance risk component.

    Practice Next

    Relevant for Exams: