Question

What is the benefit of using PML as a basis for surplus reinsurance?

a.

It reduces the insurer's need for surplus reinsurance protection.

b.

It increases the reinsurer's share of the surplus.

c.

It increases the insurer's share of the surplus.

d.

None of the above.

Posted under IC85 Reinsurance Management

Answer: (a).It reduces the insurer's need for surplus reinsurance protection. Explanation:The approach based on PML (Probable Maximum Loss) assists the ceding insurer to retain more premiums and reduce their need for surplus reinsurance protection. This means that the insurer can decide to retain a higher proportion of the risk and reinsure a lower proportion, which can lead to cost savings for the 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 benefit of using PML as a basis for surplus reinsurance?
Add Comment

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is Quota Share Reinsurance?

View solution

Q. What is Fixed Quota Share Reinsurance?

View solution

Q. How is the percentage of retention determined in Variable Quota Share Reinsurance?

View solution

Q. How are premiums and claims shared in Fixed Quota Share Reinsurance?

View solution

Q. How is Variable Quota Share Reinsurance graduated to align with the occupancy of risk?

View solution

Q. What is quota share reinsurance?

View solution

Q. How is the percentage of retention determined in fixed quota share reinsurance?

View solution

Q. Why are quota share treaties usually more profitable to reinsurers?

View solution

Q. Why is the quota share method adopted for short-term specialized requirements rather than as a long-term arrangement?

View solution

Q. When is quota share reinsurance protection typically used by a newly established insurer?

View solution

Q. In the surplus method, who decides the limit of liability which can be retained on any one risk or class of risk?

View solution

Q. What is a "line" in a surplus treaty?What happens if the ceding insurer decides to retain only Rs. 3,00,000 for a particular risk under a surplus treaty?

View solution

Q. What is a "line" in a surplus treaty?

View solution

Q. What is a second surplus treaty?

View solution

Q. What options does a ceding insurer have when the sums insured on policies exceed the limits of a surplus treaty?

View solution

Q. In the proportional treaty, what is the meaning of a "line"?

View solution

Q. What is a second surplus treaty in reinsurance?

View solution

Q. What is a surplus treaty?

View solution

Q. What is the method of cession?

View solution

Q. What is the insurer's retention?

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!

Logical Reasoning

Enhance your logical thinking and decision-making abilities with our Logical...

Microbiology

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

Cognitive Radio

Step into the dynamic world of Cognitive Radio, where wireless communication meets...

Highway Engineering

Navigate the road to efficient transportation with our Highway Engineering category....

General Knowledge

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

Human Resource Management

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

Molecular Biology

Dive into the intricate world of molecular biology with our specialized category....

Mechatronics

Enter the world of integrated engineering systems with our Mechatronics category....

IC 92 Actuarial Aspects of Product Development

Sharpen your understanding of actuarial principles in product development with our...