Question

What is a "line" in a surplus treaty?

a.

The amount of premium paid by the ceding insurer

b.

The number of risks covered by the treaty

c.

The amount ceded to the surplus treaty equal to the ceding insurer's retention

d.

The amount ceded to the surplus treaty in excess of the ceding insurer's retention

Posted under IC85 Reinsurance Management

Answer: (c).The amount ceded to the surplus treaty equal to the ceding insurer's retention Explanation:In a surplus treaty, a "line" is equal to the ceding insurer's retention. For example, if a ceding insurer has a ten line surplus treaty on the basis of a maximum retention of Rs. 5,00,000, the capacity of the treaty to absorb liability over and above the retention would be Rs. 50,00,000 (10 x Rs. 5,00,000), and the ceding insurer would have automatic protection for policies having sums insured up to Rs. 55,00,000.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

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

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

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

Q. What is a risk-attaching basis?

View solution

Q. What is loss-occurring basis?

View solution

Q. What is the purpose of the treaty arrangement between ceding insurer and reinsurer?

View solution

Q. What is included in the treaty as a document of agreement?

View solution

Q. Why are descriptions such as “all classes of business transacted in the fire department” not readily accepted in treaties?

View solution

Q. What is listed in the treaty regarding territorial scope?

View solution

Q. Why would a ceding insurer transacting business in the USA negotiate a separate treaty for such business?

View solution

Q. Which type of treaty usually has a ‘worldwide’ scope?

View solution

Q. What is the difference between the risk-attaching basis and the loss-occurring basis?

View solution

Q. What are exclusions in a reinsurance treaty?

View solution

Q. Why might a reinsurer exclude certain risks from a treaty?

View solution

Q. Why might a reinsurer exclude certain risks from a treaty?What is a bordereaux?

View solution

Q. What information is typically included in a bordereaux?

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!

Biology

Dive into the realm of life sciences with our Biology category. Explore the wonders...

Life Sciences

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

Verbal Reasoning

Sharpen your logical thinking and reasoning abilities with our Verbal Reasoning...

Foundation Engineering

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

Instrumentation Transducers

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

IC 92 Actuarial Aspects of Product Development

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

Non Verbal Reasoning

Enhance your cognitive abilities with our Non-Verbal Reasoning category. Dive into...

General Knowledge

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

Cytogenetics

Delve into the genetic mysteries of chromosomes with our Cytogenetics category....