The primary function of a reinsurer is to

The primary function of a reinsurer is to

• A. Assume loss exposures from a primary insurer
• B. Write direct auto policies
• C. Regulate insurer rates
• D. Manage consumer complaints

Answer: (A)

Reinsurance exists to transfer risk from a primary insurer to another company. The primary function of a reinsurer is to assume loss exposures from a primary insurer, providing additional capacity to underwrite policies and helping stabilize results by sharing large or catastrophic losses. This relationship lets the primary insurer write more business and protect its solvency when big claims occur. The other choices describe roles not performed by reinsurers: writing direct auto policies is the job of the primary insurer, not the reinsurer; regulating insurer rates is done by regulators, not reinsurers; and managing consumer complaints falls under the insurer’s customer service operations and regulatory oversight, not the reinsurer.

Reinsurance exists to transfer risk from a primary insurer to another company. The primary function of a reinsurer is to assume loss exposures from a primary insurer, providing additional capacity to underwrite policies and helping stabilize results by sharing large or catastrophic losses. This relationship lets the primary insurer write more business and protect its solvency when big claims occur.

The other choices describe roles not performed by reinsurers: writing direct auto policies is the job of the primary insurer, not the reinsurer; regulating insurer rates is done by regulators, not reinsurers; and managing consumer complaints falls under the insurer’s customer service operations and regulatory oversight, not the reinsurer.