In commercial risk management, different mechanisms are deployed to evaluate and distribute exposure. Pair each specialized insurance procedure in List A with its correct operational definition in List B.
- UnderwritingThe technical evaluation, selection, and risk-pricing process conducted by an insurer prior to policy issuance.
- Treaty ReinsuranceAn ongoing contract where a reinsurer automatically accepts a defined portfolio of risks ceded by a primary insurer.
- Co-insuranceA joint risk-sharing arrangement where multiple insurers directly contract with a single insured for specified percentages of exposure.
- RetrocessionA secondary transaction where a reinsurer cedes a portion of its accepted reinsurance liabilities to another reinsuring company.
Answer
Underwriting matches the technical evaluation and risk-pricing process; Treaty Reinsurance matches the ongoing contract for automatic portfolio risk transfer; Co-insurance matches the joint risk-sharing by multiple insurers directly with one policyholder; Retrocession matches the transaction where a reinsurer transfers accepted liability to another reinsurer.
Underwriting is the assessment and pricing of risk before policy issuance. Treaty Reinsurance provides automatic coverage for a predetermined category of risks under an existing agreement. Co-insurance refers to multiple primary insurers covering a single policyholder directly in agreed proportions. Retrocession represents the transfer of risk from one reinsurer to another.
Step-by-Step Solution
Key Concept
Reinsurance, Co-insurance, and Underwriting Concepts