MANAGEMENT

Detailed explanation-1: -Some risks are too big for insurance companies to bear alone. That’s where reinsurance comes in. When insurance companies don’t want to assume too much risk, they transfer the excess risk to reinsurance companies.

Detailed explanation-2: -Risk transfer is most often accomplished through an insurance policy. This is a voluntary arrangement between two parties, the insurance company and the policyholder, where the insurance company assumes strictly defined financial risks from the policyholder.

Detailed explanation-3: -Risks can be transferred between individuals, from individuals to insurance companies, or from insurers to reinsurers. When an insurance policy is purchased, the insurance company agrees to compensate the policyholder for specific losses in exchange for the premium received.

Detailed explanation-4: -Insurance. The transfer of Pure risk from one party to another for a price through a legal contract that spells out the terms, perils covered, and property/perils excluded.

Detailed explanation-5: -Risk pooling is the practice of sharing all risks among a group of insurance companies. With risk pooling arrangements, instead of participants transferring risk to someone else, each company reduces their own risk.