(a) What is reinsurance?
(b) Explain four essential features of insurable interest.
Explanation
(a) What is Reinsurance?
Reinsurance is a process where the risk already assumed by a direct insurer is with another insurer known as the reinsurer which,has no direct link with the insured.
(b)(i) Essentials of Insurable Interest:
(i) There Must be property, life, potential liability, etc which is capable of being insured.
(ii) Such property, life or legal liability, etc. must be the subject matter-of insurance.
(iii) The insured must stand in a relationship with the subject matter of insurance-whereby he will benefit from its safety and prejudiced by its destruction.
(iv) The relationship between the insured-and the-subject matter must be recognized at law.