The transfer of risks already undertaken from insurance one insurance company to another is?

Assessment: WAEC SSCE - Commerce - 2002 (Objective) Subject: Commerce

Question 1 Report

The transfer of risks already undertaken from insurance one insurance company to another is?
Answer Details
The transfer of risks already undertaken from one insurance company to another is known as re-insurance. In other words, re-insurance is a process by which an insurer transfers some of the risks it has taken on to another insurance company in exchange for a portion of the premium it has received. Re-insurance helps insurance companies to reduce their exposure to risk and financial losses by sharing the risk with other insurers. This enables insurers to underwrite larger risks than they would be able to on their own, and it helps to stabilize the insurance market.
Read lesson note on Legal Aspect Of Business (WAEC)
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