A life insurance company transferring some of its risk to another insurer. The insurer assuming the risk is called the

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Study for the Louisiana Series 103 – Life, Health, and Accident or Sickness Insurance Exam. Familiarize yourself with key concepts through engaging questions and explanations. Prepare effectively for your exam!

Multiple Choice

A life insurance company transferring some of its risk to another insurer. The insurer assuming the risk is called the

Explanation:
Reinsurance is the process of one insurer transferring part of its risk to another insurer. The company that accepts the transfer is the reinsurer. This arrangement lets the original insurer share in losses, increase its underwriting capacity, and stabilize financial results. The insurer that transfers the risk is known as the ceding company or cedent, while the reinsurer is the entity taking on the risk. A broker is just an intermediary who places coverage and does not assume risk, and an adjuster handles claims after a loss, not risk transfer.

Reinsurance is the process of one insurer transferring part of its risk to another insurer. The company that accepts the transfer is the reinsurer. This arrangement lets the original insurer share in losses, increase its underwriting capacity, and stabilize financial results. The insurer that transfers the risk is known as the ceding company or cedent, while the reinsurer is the entity taking on the risk. A broker is just an intermediary who places coverage and does not assume risk, and an adjuster handles claims after a loss, not risk transfer.

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