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WAEC Commerce 2021 Question 26

Question 26

Insurance

The practice by which insurance companies share risks with other insurance companies is

  1. A.contribution.
  2. B.re-insurance.
  3. C.under insurance.
  4. D.underwriting.
Show the answer and explanation

Answer: B (re-insurance.)

Explanation

In re-insurance an insurer passes part of a big risk it has accepted to other insurance companies, so no single company bears all of it.