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WAEC Commerce 1997 Question 88

Question 88

Insurance

One of the features of reinsurance is the

  1. A.total transfer of risk from one company to another
  2. B.protection of insurance company by the government
  3. C.protection of the insured by the third party
  4. D.collection of indemnity by third party only
  5. E.transfer of a portion of risk from one insurer to another
Show the answer and explanation

Answer: E (transfer of a portion of risk from one insurer to another)

Explanation

In reinsurance an insurer passes part of a large risk to another insurer.