A functional reinsurance is that it?

A. protects the account of the insurer against large claims
B. discourage the spread of risk in the insurance market
C. provides protection for uninsured losses
D. encourages the insured to make claims from more than one insurer

Correct Answer: Option A

A. protects the account of the insurer against large claims

Explanation

Reinsurance is also known as insurance for insurers or stop-loss insurance. Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.