Reinsurance Is Insurance Purchased by Insurers from Other Insurers to Limit

question 55

True/False

Reinsurance is insurance purchased by insurers from other insurers to limit the total loss an insurer would experience in case of a disaster.

---

Definitions:

Cash Operating Costs

Expenses directly related to the daily operational activities of a business, excluding financing costs and taxes.

Depreciated

An accounting process of allocating the cost of a tangible asset over its useful life, reflecting its decrease in value over time.

Marginal Tax Rate

The rate at which an additional dollar of income would be taxed, giving insight into the impact of potential income increases on one's tax burden.

Cash Operating Costs

Expenditures directly related to the day-to-day business operations, excluding non-cash costs.