Question

Which of the following is an important consideration when setting the reinsured's retention for the excess of loss cover in non-proportional reinsurance?

a.

The reinsured should set the retention high enough to be involved in the majority of claims

b.

The reinsured should set the retention low enough to be exposed in any one loss

c.

The reinsured should set the retention high enough to keep the insurer from being too greatly exposed in any one loss

d.

The reinsured should set the retention low enough to keep the insurer from being too greatly exposed in any one loss

Posted under IC85 Reinsurance Management

Answer: (c).The reinsured should set the retention high enough to keep the insurer from being too greatly exposed in any one loss Explanation:The ideal level of retention has been vaguely stated as being low enough as not to be involved in the majority of the claims and yet high enough to keep the insurer from being too greatly exposed in any one loss.

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Q. Which of the following is an important consideration when setting the reinsured's retention for the excess of loss cover in non-proportional reinsurance?
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