Question

How does the lower retention of the reinsured affect the rate?

a.

It decreases the rate

b.

It increases the rate

c.

It does not affect the rate

d.

It is impossible to say

Posted under IC85 Reinsurance Management

Answer: (b).It increases the rate Explanation:The lower the retention of the reinsured the larger the number of claims the reinsurer can expect to exceed it, therefore the higher will be the rate.

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