Question

Which of the following statement is true regarding reinsurance agreement?

a.

The primary obligation to pay a claim rests with the reinsurer in a reinsurance agreement.

b.

The claim payment to the claimant is made by the reinsurer in an insurance contract.

c.

The reinsurance agreement is between the insurer and the customer, while the insurance contract is between the insurer and the reinsurer.

d.

The obligation to pay the full and legitimate claim rests with the direct insurance company in a reinsurance agreement.

Posted under IC22 Life Insurance Underwriting

Answer: (d).The obligation to pay the full and legitimate claim rests with the direct insurance company in a reinsurance agreement. Explanation:The financial obligation of the insurance contract entered into by the insurer with the client rests with the direct insurance company and not the reinsurer. The primary obligation to pay a claim, whenever it happens, always rests with the insurance company. The reinsurance agreement, on the other hand, is between the insurer and the reinsurer, and the reinsurer makes the claim payment to the direct insurance company based on the terms of the reinsurance cession and the reinsurance treaty.

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Q. Which of the following statement is true regarding reinsurance agreement?
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