Question

Retention is a combination of the financial consequences of__________

a.

Risk and event based losses

b.

Return and event based losses

c.

Return and even based profits

d.

Risk and event based profits

Posted under IC85 Reinsurance Management

Answer: (a).Risk and event based losses Explanation:Retention is the amount of risk an insurer is willing to take on and keep for its own account after ceding a portion of the risk to a reinsurer. Retention is typically expressed as a dollar amount or as a percentage of the total insured value. The purpose of retention is to align the insurer's interests with those of the insured and to ensure that the insurer has sufficient funds to pay claims in the event of a loss. Therefore, retention is a combination of the financial consequences of risk and event based losses, which the insurer must be prepared to absorb. The other options, return and event based losses, return and even based profits, and risk and event based profits, are not relevant to the definition of retention.

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Q. Retention is a combination of the financial consequences of__________
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