Question

What is the obligation of a reinsurer when the ceding insurer is in financial difficulties or is insolvent?

a.

Reinsurer shares commercial fate, hence reinsurer will have to pay his full share of the same loss

b.

Reinsurer shares insurance fate, hence reinsurer will have to pay his full share of the same loss

c.

Reinsurer shares insurance fate, hence reinsurer will not have to pay his share of the same loss

d.

Reinsurer shares commercial fate, hence reinsurer will not have to pay his full share of the same loss

Posted under IC85 Reinsurance Management

Answer: (b).Reinsurer shares insurance fate, hence reinsurer will have to pay his full share of the same loss Explanation:When a ceding insurer is in financial difficulties or is insolvent, the reinsurer's obligation to pay remains unchanged. Reinsurance is a contract between the insurer and the reinsurer, and the reinsurer assumes a portion of the risk underwritten by the insurer. Therefore, if the insurer becomes insolvent, the reinsurer's obligation to pay is not affected and they will have to pay their full share of the same loss. Reinsurers share the "insurance fate" but not the "commercial fate" of the ceding insurer.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. What is the obligation of a reinsurer when the ceding insurer is in financial difficulties or is insolvent?
Add Comment

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. Reinsurance is a contract between ______________and ___________________.

View solution

Q. Which of the following is true about GIC's handling of non-reciprocal inwards into India?

View solution

Q. Which of the following statements about the history of reinsurance is correct?

View solution

Q. Which of the following statements about the reinsurer is correct?

View solution

Q. Which of the following statements about reinsurance is correct?

View solution

Q. Which of the following is incorrect with respect to advantages of reinsurance?

View solution

Q. What is the capacity of an insurer to accept risks with reinsurance support?

View solution

Q. What are the advantages of reinsurance?

View solution

Q. What is the function of reinsurance?

View solution

Q. What is the purpose of reinsurance?

View solution

Q. What is the analogy used by Dr. F.L. Tuma to describe the function of reinsurance?

View solution

Q. How can a well-planned reinsurance programme ensure long term profitability?

View solution

Q. What is the aim of the basic principle of spread of risks?

View solution

Q. How does reinsurance achieve a wider spread of risks?

View solution

Q. What is the function of excess of loss reinsurance protection?

View solution

Q. How can a well-planned reinsurance program ensure compliance of solvency norms?

View solution

Q. What is the purpose of arranging an excess of loss reinsurance protection?

View solution

Q. What is the basic principle of spread of risks?

View solution

Q. What are the factors that can cause major fluctuations in claims costs?

View solution

Q. What is the purpose of reinsurance in insurance business?

View solution
View All MCQs on IC85 Reinsurance Management

Recommended Subjects

Are you eager to expand your knowledge beyond IC85 Reinsurance Management? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!

Marketing and Marketing Management

Uncover the strategies and tactics of marketing with our Marketing and Marketing...

Microbiology

Uncover the fascinating world of microbes with our Microbiology category. Delve into...

Foundation Engineering

Master the principles of Foundation Engineering with our specialized category....

General Knowledge

Expand your horizons and stay informed about the world with our General Knowledge...

Enzyme Technology

Unlock the power of enzymes with our Enzyme Technology category. Explore enzyme...

Instrumentation Transducers

Master the art of instrumentation and transducers with our specialized category....

Textile Engineering

Explore the dynamic world of Textile Engineering with our specialized category. Delve...

Biochemical Engineering

Master the synergy of biology and engineering with our Biochemical Engineering...

Basic Electrical Engineering

Master the fundamentals of Electrical Engineering with our specialized category....