Question

Which of the following forms of reinsurance is used to arrange automatic additional capacity for the surplus after exhausting the existing automatic arrangements for reinsurance cessions?

a.

Facultative

b.

Retrocession

c.

Treaty reinsurance

d.

Facultative obligatory treaty

Posted under IC85 Reinsurance Management

Answer: (d).Facultative obligatory treaty Explanation:Facultative obligatory treaty is used to arrange automatic additional capacity for surplus after exhausting existing automatic arrangements for reinsurance cessions. Therefore, option d is the correct answer. Option a Facultative reinsurance is reinsurance where the ceding insurer has the option to cede and the reinsurer has the option to accept a specific risk of a specific insured. Option b Retrocession is a process where a reinsurance company reinsures another reinsurance company. Option c Treaty reinsurance consists of an agreement between the original insurer and the reinsurer whereby the reinsurer automatically accepts a certain liability for all risks falling within the scope of the agreement.

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Q. Which of the following forms of reinsurance is used to arrange automatic additional capacity for the surplus after exhausting the existing automatic arrangements for reinsurance...
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