Alberta General Insurance Level 1 Practice Exam

Question: 1 / 400

What strategy do insurers NOT use reinsurance for?

To share profits equally among all parties

Insurers do not use reinsurance to share profits equally among all parties because reinsurance is a risk transfer mechanism used to protect insurers against large losses, not to distribute profits. The other options, including reducing catastrophic loss, writing a higher level of risk, and maintaining a proper reserve/liability balance, are all common reasons why insurers use reinsurance.

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To reduce the effects of catastrophic loss

To write a higher level of risk

To maintain a proper reserve/liability balance

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