Question

What is the impact of a bad reinsurance market on an insurer's retention?

a.

It decreases retention

b.

It increases retention

c.

It has no impact

d.

It causes the insurer to drop certain types of policies

Answer: (b).It increases retention Explanation:In times of bad results, reinsurers would normally tend to require higher retentions with the clear intention of causing the insurer to have a greater involvement in the losses and, by implication, provoke them to initiate some remedial action.

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Q. What is the impact of a bad reinsurance market on an insurer's retention?

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