How does risk transfer work in a multiple co-insurer arrangement?

In a multiple co-insurer arrangement, risk transfer works by splitting the risks among different insurers. This collaborative approach allows insurers to share the financial burden of large or high-risk policies, reducing the exposure for each individual insurer. By distributing the risks, they can effectively manage their overall liability and ensure that no single insurer is overexposed to significant losses. This method not only helps stabilize the insurance market but also promotes a more efficient allocation of resources among the insurers involved.

The other options indicate different approaches to risk management that do not accurately reflect the principles of a co-insurer arrangement. For instance, if all risks were retained by the original insurer, this would not represent a co-insurance model but rather a sole underwriting approach. Similarly, stating that risks are solely managed by one main insurer disregards the fundamental concept of co-insurance where multiple insurers play a role. Lastly, transferring risk to independent agents does not align with the primary function of co-insurance, which specifically involves multiple insurers sharing the risk rather than agents.