Match each insurance concept in Column X with its corresponding function or description in Column Y.
- ReinsuranceThe arrangement where a primary insurance company transfers a portion of an accepted risk to another insurer to limit financial loss.
- Co-insuranceThe practice where two or more insurance companies jointly cover a single risk directly for a policyholder at inception.
- UnderwritingThe process of examining, evaluating, and determining whether to accept a proposed risk and setting the appropriate premium rate.
Answer
Reinsurance matches the transfer of accepted risk to another insurer; Co-insurance matches joint coverage of a risk directly with the policyholder; Underwriting matches the evaluation of risk and determination of premiums.
Reinsurance describes an insurer shifting part of its risk burden to a secondary insurer. Co-insurance describes two or more insurers agreeing directly with the policyholder to share a large risk. Underwriting describes the administrative and technical process of evaluating risks and determining policy conditions.
Step-by-Step Solution
Key Concept
Distinction between Reinsurance, Co-insurance, and Underwriting in risk management
Estimated Time:45s