Q.Passing on a part of a very large risk by one insurer to another insurer is known as:

When the party seeking extra cover is the insurer itself — not the original insured — the arrangement is insurance of the insurer.

Ask who is transferring the risk — the insured, or the insurer — and whether it happens before or after the original policy is issued.

Re-insurance is insurance of the insurer: after accepting a risk too large to carry alone, the original (ceding) insurer passes a part of that risk to another insurer, the re-insurer, in return for a share of the premium. The original insured continues to deal only with the original insurer and has no direct relationship with the re-insurer.

Option-by-option analysis:

• (a) Incorrect — double insurance is where the same INSURED takes more than one policy on the same subject matter, not where an insurer passes on a risk.
• (b) Incorrect — in co-insurance several insurers share a risk directly from the outset; here one insurer first accepts the whole risk and then passes part on.
• (c) Correct — this exactly describes re-insurance.
• (d) Incorrect — contribution is the principle sharing a loss between insurers of the same risk, not the act of passing on a risk.