Question

What is the fundamental difference between the way a marine surplus functions and the way a property surplus functions?

a.

Marine surplus reinsurances do not allow for selection against a reinsurer, while property surplus reinsurances do

b.

Property surplus reinsurances do not allow for selection against a reinsurer, while marine surplus reinsurances do

c.

Both marine and property surplus reinsurances allow for selection against a reinsurer

d.

Neither marine nor property surplus reinsurances allow for selection against a reinsurer

Posted under IC85 Reinsurance Management

Answer: (a).Marine surplus reinsurances do not allow for selection against a reinsurer, while property surplus reinsurances do Explanation:There is one fundamental difference in the manner in which a marine surplus functions and this must be noted. It was said for property reinsurances that if the risk ‘is not a very good risk the insurer may keep less than (Rs.x) and the amount to be reinsured will therefore increase’ in case of treaties without a line limitation. This selection against a reinsurer is not permitted in marine reinsurances. The ceding insurer on every occasion must keep a full retention before reinsuring.

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Q. What is the fundamental difference between the way a marine surplus functions and the way a property surplus functions?
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