Methods by which insurers may minimize or avoid catastrophic losses include which of the following?
I.The use of reinsurance
II.Concentrating coverage written in one geographic region
A)I only
B)II only
C)both I and II
D)neither I nor II

Question

Quizplus · Accepted Answer

The use of reinsurance is a method by which insurers can transfer some portion of their potential catastrophic losses to other companies, thereby minimizing their own exposure. Concentrating coverage in one geographic region, on the other hand, is a practice that increases an insurer's exposure to catastrophic losses and does not minimize or avoid them.

Methods by Which Insurers May Minimize or Avoid Catastrophic Losses