Question

How can a reinsurance treaty be structured to help insurance companies cope with new business and other capital constraints?

a.

By reducing the amount of reserves that must be held by the company

b.

By providing direct insurance companies with capital

c.

By offering their expertise in underwriting cases received by the direct insurer

d.

By transferring the risk and liability from the direct insurance company to the reinsurer

Posted under IC22 Life Insurance Underwriting

Answer: (a).By reducing the amount of reserves that must be held by the company Explanation:A reinsurance treaty can be structured so that the amount of reserves that must necessarily be held by a company can be reduced, which may be useful in coping with the new business and other capital constraints.

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Q. How can a reinsurance treaty be structured to help insurance companies cope with new business and other capital constraints?
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