What is a reinsurance pool?

A reinsurance pool refers to a collective effort by multiple insurance companies to share the risks associated with insuring large or risky policies. This pooling allows these companies to combine their resources and capital, thus enabling them to underwrite insurance jointly. By doing so, they can mitigate the financial impact of large claims and catastrophic events that might be too risky for individual insurers to handle alone.

In this arrangement, each insurer contributes to a common fund and shares in both the premiums collected and the claims paid out. This setup helps to stabilize the insurance market, as it allows insurers to spread the risk across a larger base, making it more manageable.

The other options describe different concepts in insurance. Sharing risks among insureds would pertain to policyholders, while a single insurer taking on high-risk clients doesn't reflect the collaborative nature of a reinsurance pool. Lastly, a government fund for catastrophic losses does not involve the collective underwriting practices that a reinsurance pool exemplifies. Thus, option B correctly encapsulates the essence of a reinsurance pool in the context of insurance and risk management.