Question

Which of the following is correct with respect to facultative reinsurance?

a.

Ceding insurer does not have the option to cede in facultative reinsurance

b.

Ceding reinsurer has the option to cede in a facultative reinsurance

c.

Reinsurer does not have the option to accept facultative reinsurance

d.

Reinsurer does not have the option to decline risk of insurance company

Posted under IC85 Reinsurance Management

Answer: (b).Ceding reinsurer has the option to cede in a facultative reinsurance Explanation:Facultative reinsurance is a type of reinsurance contract where the ceding insurer has the option to cede and the reinsurer has the option to accept or decline a specific risk of a specific insured. So, option b is correct. Option a is incorrect because the ceding insurer has the option to cede in facultative reinsurance. Option c is incorrect because the reinsurer has the option to accept or decline facultative reinsurance. Option d is incorrect because the reinsurer has the option to decline the risk of the insurance company in facultative reinsurance.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. Which of the following is correct with respect to facultative reinsurance?
Add Comment

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is treaty reinsurance?

View solution

Q. What are the two ways in which treaty reinsurance may be transacted?

View solution

Q. What is the key difference between facultative and treaty reinsurance?Why are the administrative costs lower in treaty reinsurance than in facultative reinsurance?

View solution

Q. What is the key difference between facultative and treaty reinsurance?

View solution

Q. What is a formal treaty wording?

View solution

Q. Which of the following is not a characteristic of treaty reinsurance?

View solution

Q. Which of the following is typically described in a formal treaty wording for treaty reinsurance?

View solution

Q. How does an insurer achieve the desired level of reinsurance protection in treaty reinsurance?

View solution

Q. What is retrocession in reinsurance?

View solution

Q. What is the purpose of retrocession in reinsurance?

View solution

Q. What is Treaty Reinsurance?

View solution

Q. What are the two types of basis on which Treaty reinsurance may be transacted?

View solution

Q. What rights does each party forego in a Treaty Reinsurance agreement?

View solution

Q. What is a formal treaty wording in Treaty Reinsurance?

View solution

Q. What is the advantage of Treaty reinsurance over Facultative reinsurance in terms of administrative costs?

View solution

Q. ABC is a reinsurance company. It gets into a contract with another reinsurance company: XYZ Reinsurance Co. Ltd. Such contracts between two reinsurance companies are known as _______________

View solution

Q. What is Facultative Obligatory Treaty?

View solution

Q. Is Facultative Obligatory Treaty a common type of reinsurance contract?

View solution

Q. Why is the ceding commission for Facultative Obligatory treaties progressively less than the quota share and surplus treaties?

View solution

Q. For what purposes is Facultative Obligatory Treaty used?

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!

Mechanics of Materials

Unlock the principles of Mechanics of Materials with our specialized category. Dive...

Environment Management

Master the art of Environment Management with our specialized category. Explore...

DC Machines

Dive into the fundamentals of direct current (DC) machines with our specialized...

Enzyme Technology

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

Heat Transfer

Explore the fascinating world of heat transfer with our Heat Transfer category....

IC38 Life Insurance Agent Exam

Prepare for success in the Insurance Institute of India (III) IC38 IRDA examination...

Human Resource Management

Explore the dynamic field of Human Resource Management (HRM) with our dedicated...

Life Sciences

Delve into the diverse world of life sciences with our specialized category. Explore...

Chemistry

Unlock the mysteries of chemistry with our Chemistry category. Delve into the...