[amp_mcq option1=”Direct Insurer” option2=”Ceding Insurer” option3=”Re-Insurer” option4=”Double Insurer” correct=”option3″]
The correct answer is: C. Re-Insurer
A re-insurer is an insurance company that accepts part of the risk from another insurance company (the ceding insurer). This is done to protect the ceding insurer from large losses. The re-insurer will charge a fee for this service, which is called a reinsurance premium.
A direct insurer is the insurance company that sells the policy to the insured. The direct insurer is responsible for paying out claims, up to the amount of the policy.
A ceding insurer is the insurance company that transfers some of its risk to a re-insurer. The ceding insurer is still responsible for paying out claims, but it can reduce its risk by transferring some of it to a re-insurer.
A double insurer is not a term that is used in the insurance industry.