ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Reinsurance is also known as insurance for insurers or stop-loss insurance. Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.

Detailed explanation-2: -Several common reasons for reinsurance include: 1) expanding the insurance company’s capacity; 2) stabilizing underwriting results; 3) financing; 4) providing catastrophe protection; 5) withdrawing from a line or class of business; 6) spreading risk; and 7) acquiring expertise.

Detailed explanation-3: -Once the insurance company sends an adjuster and evaluates the damage to your home, they’ll pay a settlement amount in either replacement cost or actual cash value. Replacement cost gives you funds to cover the costs to rebuild your home or repair damages using similar materials.

Detailed explanation-4: -Answer and Explanation: Insurance companies protect themselves against losses due to adverse selection and moral hazards by using deductibles.

Detailed explanation-5: -Implement the most precise underwriting possible. Create a portfolio that minimizes your risk. Implement claims reserve policy. Improve other core insurance practices. Collaborate with Insurtechs. 30-Mar-2022