Question

Which policy can be purchased for coverage against potentially catastrophic situations faced by the primary insurer?

a) Reinsurance policy
b) Excess of loss policy
c) Catastrophic insurance policy
d) Stop-loss policy

Answer 1

A reinsurance policy is the correct answer for protection against catastrophic risks faced by primary insurers, and a distributive policy typically benefits the most citizens by providing widespread services or goods.

Step-by-step explanation:

Regarding the policy which can be purchased for coverage against potentially catastrophic situations faced by the primary insurer, the correct answer is a) Reinsurance policy. Reinsurance policies are designed specifically for primary insurers to manage risk by purchasing insurance from other insurance companies, thereby mitigating the impact of a potential catastrophic loss. These policies allow the primary insurer to share the risk of large claims and secure their financial stability.

When considering which type of policy directly benefits the most citizens between regulatory policy and distributive policy, b) distributive policy tends to have a broader impact on the general public. Distributive policies are designed to allocate services, funds, or goods to members of society, and often have a widespread effect as they are aimed at providing benefits to a large section of the population, such as subsidies, grants, or social programs. Regulatory policies, while important, typically have a more targeted impact.