California Insurance License Exam Practice Test Practice Question
In a reinsurance agreement, the insurer that transfers some or all its loss exposure to another insurer is called the
Correct Answer: A
Rationale: In a reinsurance agreement, the insurer that transfers some or all of its loss exposure is known as the primary insurer. This entity seeks to mitigate risk by sharing potential losses with another insurer.
Option B, captive insurer, refers to an insurance company created to provide coverage for its parent company, not involved in transferring risk to another insurer.
Option C, secondary insurer, is misleading as it typically describes the reinsurer, not the party transferring risk.
Option D, indemnified insurer, is incorrect since it does not specifically define the party involved in reinsurance agreements.
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