Some events rarely happen but when they do insurance company must respond appropriately. They fall in...

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Finance

Some events rarely happen but when they do insurance companymust respond appropriately. They fall in a high severity and lowfrequency category but there are effective means of risk transferand financing.
Explain the risk transfer options, howinsurers respond and the effect on the company operations. [25 marks]

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Risk transfer meaning Risk transfer is a risk management and control strategy that involves the contractual shifting of actual risk from one party to another ie shifting of a specific risk from one party to another willing party Risk transfer options 1 Insurance Risk transfer is most often accomplished through an insurance policy This is a voluntary arrangement between two parties the insurance company and the policyholder where the insurance company assumes strictly defined financial risks from the policyholder Insurance companies charge a fee or an insurance premium for accepting this risk ie the Insurance premium some important steps to keep in mind while choosing insurance as the risk transfer option Certificate of See Answer

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