In a risk transfer arrangement, the insurer assuming the risk is the

• A. Co-Insurer
• B. Underwriter
• C. Broker
• D. Reinsurer

Answer: (D)

In a risk transfer arrangement, the entity that takes on the insurer’s risk is the reinsurer. Reinsurance is essentially insurance for insurers: the primary (ceding) insurer transfers part or all of its potential losses to the reinsurer to reduce exposure, stabilize claims, and protect solvency. The primary insurer remains responsible to the insured, but the reinsurer reimburses a portion of claims according to the reinsurance contract.

Other roles don’t fit this specific idea. A co-insurer shares policy liability between insurers but doesn’t transfer risk to a separate insurer; an underwriter evaluates and prices risk, doesn't assume the risk from another insurer; a broker acts as an intermediary to place coverage.