SOFE AFE Exam - Topic 3 Question 100 Discussion

Actual exam question for SOFE's AFE exam

Question #: 100
Topic #: 3

[All AFE Questions]

Reinsurance is defines as:

Ato pay another party to assume a stream of contingent expenses, for a premium over the expected cost

Bto pay another party to assume a stream of contingent revenues, for an interest over the expected cost

Cto sell another party to assume a stream of contingent assets, for a premium over the actual cost

Dto sell another party to assume a stream of contingent expenses, for a discount over the expected cost

Show Suggested Answer

Suggested Answer: A

by Jesusita at Jun 16, 2025, 10:21 AM

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Ula

2 months ago

Can someone explain why it's not about revenues?

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Janine

2 months ago

Wait, is it really about contingent expenses? That seems off.

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Janella

2 months ago

Reinsurance is all about risk management!

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Kandis

3 months ago

I think option A sounds right.

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Dorethea

3 months ago

Definitely not D, that doesn't make sense.

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Jettie

3 months ago

I definitely studied that reinsurance involves premiums, but I can't remember if it was about expenses or assets.

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Merri

3 months ago

I feel like option D sounds familiar, but I can't recall if it's about selling or paying. This is tricky!

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Kiley

4 months ago

I remember practicing a question similar to this, and I think it was about assuming contingent liabilities, which might relate to option A.

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Brent

4 months ago

I think reinsurance is about transferring risk, but I'm not sure if it's specifically about expenses or revenues.

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Renato

4 months ago

This is a good test of our understanding of key insurance industry terms. I'll carefully consider each option and select the one that most accurately captures the essence of reinsurance.

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Willis

4 months ago

I'm drawing a blank on the definition of reinsurance. I'll have to go back and review my notes before I can confidently answer this.

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Jamie

4 months ago

Okay, I think I've got this. Reinsurance is when an insurance company pays another party to take on some of their risk, in exchange for a premium. Option A looks like the best fit.

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Almeta

5 months ago

Hmm, I'm a bit unsure about this one. The wording is a bit tricky, and I want to make sure I understand the concept of reinsurance before choosing an answer.

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Janey

5 months ago

This seems like a straightforward definition question. I'll read through the options carefully and select the one that best matches the description of reinsurance.

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Raul

8 months ago

Haha, C is like selling your problems to someone else! I wish I could do that with my student loans.

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Millie

7 months ago

B) to pay another party to assume a stream of contingent revenues, for an interest over the expected cost

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Leslee

7 months ago

Haha, C is like selling your problems to someone else! I wish I could do that with my student loans.

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Jennifer

7 months ago

A) to pay another party to assume a stream of contingent expenses, for a premium over the expected cost

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Ressie

8 months ago

I thought reinsurance was when you sell your insurance to someone else? D sounds more like that to me.

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Elmer

8 months ago

I'm not sure, but I think it's either A or D. Reinsurance is definitely about transferring risk, but I'm not sure about the discount part.

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Herminia

8 months ago

A is the correct answer. Reinsurance is when an insurance company pays another party to assume a stream of contingent expenses, like claims, in exchange for a premium.

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Lindy

8 months ago

Yes, you're right. It's all about transferring risk to another party in exchange for a premium.

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Laticia

8 months ago

I think A is the correct answer. Reinsurance is when an insurance company pays another party to assume a stream of contingent expenses.

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Ciara

8 months ago

I agree with Joni, option A makes sense. It's all about managing risk and costs in the insurance industry.

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Joni

9 months ago

I think the answer is A, because reinsurance is about transferring risk to another party for a premium.

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