a 1. It is known that insurance companies assume risk on behalf of their clients in exchange for premium. But why are they also regarded as financial intermediaries? Discuss. (4 marks) 11. Insurance companies may also buy insurance to reduce their risk exposure. What does 'buy insurance mean to insurance companies? Evaluate the advantage for insurance companies in buying insurance apart from risk reduction (4 marks) (b) Asymmetric information creates problems in the insurance sector and there are two main problems arise from asymmetric information. Evaluate these two main problems with examples. (6 marks) -- c) Identify and briefly explain the insurance practices that can minimize the following problems caused by asymmetric information in the insurance sector. A client with health problem tries to purchase medical insurance. (2 marks) An inexperienced driver buys motor insurance for his car (2 marks) An insured person files claim for an event that did not occur. (2 marks) li III 1 B 1 III of 22