Final answer:
Reinsurance does not aim at reducing the unearned portion of gross premiums on outstanding policies at the time of valuation.
option b is the correct
Step-by-step explanation:
The statement is false. Reinsurance is a risk management technique used by insurance companies to transfer a portion of their risk to other insurance companies. It involves the primary insurer (ceding company) purchasing insurance coverage (called reinsurance) from another insurer (reinsurer).
The purpose of reinsurance is not to reduce the unearned portion of gross premiums on outstanding policies, but rather to limit the potential loss exposure of the primary insurer for specific policies or a portfolio of policies.
By ceding some of the risk to a reinsurer, the primary insurer can reduce its potential liability in the event of large claims or catastrophes.