Question

The relation between the insurer and the reinsurer is based on the principle of______________.

a.

Causa proxima

b.

Subrogation

c.

Uberrima fides

d.

Insurable interest

Posted under IC85 Reinsurance Management

Answer: (c).Uberrima fides Explanation:The relation between the insurer and the reinsurer is based on the principle of utmost good faith or Uberrima fides. The principle requires the insurer to provide the reinsurer with all information needed to evaluate the risk correctly. The reinsurer, in turn, gives the insurer automatic underwriting power and renounces any possibility of refusing risks that it does not like. The cedant must provide the reinsurer with detailed information on its portfolio both during the negotiations preliminary to the conclusion of the treaty and then for the period of its validity.

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Q. The relation between the insurer and the reinsurer is based on the principle of______________.
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