Question

What is the first step in determining the retention that can be supported by the portfolio of the ceding insurer?

a.

Determining the total loss and general average claims affecting all cargo on board the vessel.

b.

Creating a schedule of retentions with limits per bottom for different sizes and ages of vessels.

c.

Scaling down the retention for smaller and older vessels.

d.

Fixing the retention at aggregate sums insured per vessel through all documents.

Posted under IC85 Reinsurance Management

Answer: (a).Determining the total loss and general average claims affecting all cargo on board the vessel. Explanation:The first step is to determine the retention which can be supported by the portfolio of the ceding insurer. Loss exposures fall into two distinct classes, viz. i. Total loss and ii. General average which affect all cargo on board the vessel and particular average claims which need not affect all the cargo.

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Q. What is the first step in determining the retention that can be supported by the portfolio of the ceding insurer?
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