Question

    What is the term for insurance purchased by an insurance company directly from one or more insurance companies or through a broker for the purpose of risk management?

    A Retrocession Correct Answer Incorrect Answer
    B Subrogation Correct Answer Incorrect Answer
    C Co-insurance Correct Answer Incorrect Answer
    D Reinsurance Correct Answer Incorrect Answer
    E Underwriting Correct Answer Incorrect Answer

    Solution

    Reinsurance, often called "insurance for insurance companies," results from a contract between a reinsurer and an insurer. In it, the insurance company—known as the ceding party or cedent—transfers some of its insured risk to the reinsurance company.

    Practice Next

    Relevant for Exams: