What practice involves the spreading of risk of loss between two or more title insurance companies?

The practice of spreading the risk of loss between two or more title insurance companies is known as reinsurance. In this context, reinsurance allows a primary title insurer to transfer a portion of its risk to another insurer, thereby reducing the potential financial impact of large claims on its balance sheet. This is particularly important in the title insurance industry, where claims can arise from various issues related to property titles, such as undiscovered liens or claims.

Reinsurance is crucial because it enables title companies to manage their risk more effectively, ensuring greater stability and the potential to cover claims without jeopardizing their financial health. By entering into reinsurance agreements, title insurers can also take on larger risks or increase their overall capacity to insure more properties, making the industry more robust.

The other choices presented do not fit the definition of spreading risk between insurers. Insurable interest relates to the requirement that a person has a legitimate interest in the property being insured. Concealment refers to the withholding of material facts in the insurance context, which can lead to claims being denied. Fraud involves intentionally deceiving someone for personal gain, which is also not related to the practice of risk-sharing among insurance companies.