Which of eth following is the distribution channel a reinsurer may use to write its business?

Question

Options

• Adirect negotiations with a prospective reinsured by an account executive of the reinsurer
• Bcontacting prospective reinsureds through a broker or intermediary
• CBoth A and B
• DNeither A nor B

• A
  8% (3)
• B
  19% (7)
• C
  70% (26)
• D
  3% (1)

Explanation

Option C is correct because reinsurers use both direct and indirect distribution channels to write their business. A reinsurer can negotiate directly with a prospective reinsured through its own account executive (direct channel), and can also reach clients through brokers or intermediaries (indirect channel) - these are not mutually exclusive methods. Options A and B are not wrong on their own; they're simply incomplete, as each describes only one of the two valid channels. Option D is incorrect because both channels are legitimate and widely used in the reinsurance industry.

Memory tip: Think of reinsurance distribution like retail sales - a company can sell directly to customers and through third-party retailers at the same time. Whenever a question lists two valid industry practices as separate choices with a "Both" option, the "Both" answer is usually correct.

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