All of the Following Are Reasons for a Primary Insurer

question 36

Multiple Choice

All of the following are reasons for a primary insurer to use reinsurance EXCEPT

• A)to increase the unearned premium reserve.
• B)to increase underwriting capacity.
• C)to protect against catastrophic losses.
• D)to stabilize profits.

---

Definitions:

Government Failure

Government failure occurs when government intervention in the economy creates inefficiencies or leads to an allocation of resources that is worse than what the market would have produced on its own.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they can be consumed by everyone and one person's consumption doesn't reduce availability for others.

Quasi-Public Goods

Quasi-public goods are those that exhibit some characteristics of a public good such as non-excludability and non-rivalry but do not fully meet these criteria, often because they can be provided privately for a fee.

Optimal Amount

The quantity of production or consumption that maximizes efficiency or utility under given constraints.