Concept:Re-insurance is the practice by which an insurance company transfers a part of its risk to another insurance company.
Explanation:When the potential loss from a policy is very large, a single insurer may not be able to bear the entire risk alone.
To reduce its burden, the original insurer purchases an insurance policy from another insurance company to cover part of the possible loss.
This arrangement is known as re-insurance.
The original insurer still deals directly with the policyholder, but the re-insurer agrees to share the financial loss if a claim arises.
In this way, re-insurance spreads the risk and protects the first insurer from total financial ruin.
The other options are not correct.
Contribution applies when two or more policies cover the same risk and the insurers share the claim proportionately.
Under insurance occurs when property is insured for an amount lower than its actual value.
Underwriting is the process by which an insurer assesses and accepts risks.
None of these describes risk-sharing between insurance companies.
Therefore, the practice of sharing risks with other insurance companies is re-insurance.
Answer:C. Re-insurance