In a reinsurance arrangement, who agrees to accept the portion of the risk beyond the ceding company's retention?

• A. Ceding company
• B. Reinsurer
• C. Broker
• D. Insured

Answer: (B)

In reinsurance, risk is shared between the primary insurer (the ceding company) and a reinsurer. The ceding company keeps a certain amount of risk up to its retention limit; the reinsurer agrees to take on the portion that exceeds that retention. This transfer is made under the terms of the reinsurance agreement in exchange for a premium. The broker is just the intermediary, and the insured remains the customer of the primary insurer, not a party to the reinsurance contract.