Observation

The performance of the candidates on this question was poor.

Some of the responses expected from the candidates are:
5 (a)     Reinsurance is a process where the risk already assumed by a direct insurer is placed with another insurer known as the reinsurer which has no direct link with the insured.

5 (b)     Essentials of insurable interest:

1. there must be property, life, potential liability, etc. which is capable of being
   insured;
2. such property, life or legal liability, etc. must be the subject matter of insurance;
3. the insured must stand in a relationship with the subject matter of insurance
   whereby he will benefit from its safety and prejudiced by its destruction;
4. the relationship between the insured and the subject matter must be recognised at
   law.