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SOFE AFE Exam - Topic 3 Question 100 Discussion

Reinsurance is defines as:
A) to pay another party to assume a stream of contingent expenses, for a premium over the expected cost
B) to pay another party to assume a stream of contingent revenues, for an interest over the expected cost
C) to sell another party to assume a stream of contingent assets, for a premium over the actual cost
D) to sell another party to assume a stream of contingent expenses, for a discount over the expected cost

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:

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Suggested Answer: A

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

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Ula
7 months ago
Can someone explain why it's not about revenues?
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Janine
7 months ago
Wait, is it really about contingent expenses? That seems off.
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Janella
7 months ago
Reinsurance is all about risk management!
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Kandis
7 months ago
I think option A sounds right.
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Dorethea
7 months ago
Definitely not D, that doesn't make sense.
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Jettie
8 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
8 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
8 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
8 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
9 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
9 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
9 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
9 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
9 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
1 year 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
11 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
11 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
12 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
1 year 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
1 year 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
1 year 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
1 year ago
Yes, you're right. It's all about transferring risk to another party in exchange for a premium.
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Laticia
1 year 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
1 year 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
1 year ago
I think the answer is A, because reinsurance is about transferring risk to another party for a premium.
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