Alberta General Insurance Level 1 Practice Exam

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Ace your Alberta General Insurance Level 1 Exam with our comprehensive practice quiz. Tailored to mimic the real test, our quiz offers detailed explanations, expert tips, and all you need to succeed. Start your path to becoming a licensed professional today!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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What is NOT a reason to reinsure?

To increase insurers' capacity to write business
To earn a quick profit without risks
To maintain a proper reserve/liability balance
To provide stability in a fluctuating market

The correct answer is: To earn a quick profit without risks

Reinsurance is a risk management tool used by insurance companies to transfer a portion of their risk to another insurer, known as the reinsurer. Insurers may reinsure for various reasons such as to increase their capacity to write new business, maintain proper reserve balances, and provide stability in a fluctuating market. However, earning a quick profit without risks is not a valid reason to reinsure as it goes against the purpose of risk management. By transferring risk to a reinsurer, the insurer is still responsible for paying claims and therefore cannot expect to earn a quick profit without any risks.