When a Reinsurer Covers the Layer of Hurricane Losses for an Insurance

question 12

Multiple Choice

When a reinsurer covers the layer of hurricane losses for an insurance company between $20 million and $30 million, which of the following describes the insurance company's losses?

• A) A bull spread on total hurricane losses
• B) A bear spread on total hurricane losses
• C) A long call option on total hurricane losses
• D) A short put option on total hurricane losses

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Definitions:

Street Smarts

The experience and knowledge necessary to deal with the potential difficulties or dangers of life in urban environments.

Critical Care

Specialized healthcare provision for patients experiencing life-threatening injuries or illnesses, requiring extensive monitoring and support from specialized medical staff and equipment.

Multiple Requests

The occurrence of several demands or enquiries made simultaneously or in a short period of time.