A functional reinsurance is that it

Assessment: WAEC SSCE - Insurance - 2017 (Objective) Subject: Insurance

Question 1 Report

A functional reinsurance is that it

Answer Details
Functional reinsurance is a type of insurance that protects the original insurance company (the ceding company) from financial losses due to large claims. In other words, it acts as a form of backup insurance for the original insurer. If a policyholder makes a large claim, the ceding company can transfer some of the risk associated with that claim to a reinsurance company. This helps the ceding company manage its financial exposure and reduces the likelihood that it will become insolvent due to a single large claim.
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