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Why do insurance companies use reinsurance?
  • a)
    To increase their underwriting capacity.
  • b)
    To stabilize their profits.
  • c)
    To reduce their investment portfolio.
  • d)
    To eliminate operational risks.
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Why do insurance companies use reinsurance?a)To increase their underwr...
Insurance companies use reinsurance primarily to increase their underwriting capacity. Reinsurance allows them to accept more policies and write larger lines of insurance by sharing the risk with reinsurers, which helps them expand their business while managing risk exposure.
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Why do insurance companies use reinsurance?a)To increase their underwriting capacity.b)To stabilize their profits.c)To reduce their investment portfolio.d)To eliminate operational risks.Correct answer is option 'A'. Can you explain this answer?
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