Question

What is the purpose of reinsurers requiring higher retentions during times of bad results?

a.

To cause the insurer to have a greater involvement in the losses

b.

To reinsure as much as possible

c.

To provoke the insurer to initiate remedial action

d.

To earn higher return on their investment portfolio

Posted under IC85 Reinsurance Management

Answer: (a).To cause the insurer to have a greater involvement in the losses Explanation:During times of bad results, reinsurers would normally require higher retentions with the clear intention of causing the insurer to have a greater involvement in the losses and provoke them to initiate some remedial action.

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Q. What is the purpose of reinsurers requiring higher retentions during times of bad results?
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