Match each insurance risk-sharing concept on the left with its corresponding operational description on the right.
- ReinsuranceAn arrangement where an insurer transfers part of an already accepted risk to another insurer.
- Co-insuranceA risk-sharing scheme where two or more insurers issue a single policy to jointly cover a risk directly.
- UnderwritingThe process of assessing, evaluating, and deciding the terms for accepting a risk.
Answer
Reinsurance corresponds to an arrangement where an insurer transfers part of an already accepted risk to another insurer; Co-insurance corresponds to a risk-sharing scheme where two or more insurers issue a single policy to jointly cover a risk directly; Underwriting corresponds to the process of assessing, evaluating, and deciding the terms for accepting a risk.
Reinsurance represents an insurer passing on part of a risk it has already insured to another company. Co-insurance represents two or more insurers directly sharing a single risk with the insured party. Underwriting represents the initial process of assessing and rating a risk before issuing coverage.
Step-by-Step Solution
Key Concept
Distinction between Reinsurance, Co-insurance, and Underwriting