Question

In a year of catastrophe, the reinsurance programme should be designed in such a manner that ________________

a.

The strain on the resources of the insurer must be maximum

b.

The strain on the resources of the insurer must be minimum

c.

The invested funds have a cash loss estimation facility

d.

The invested funds manage a good cash flow

Posted under IC85 Reinsurance Management

Answer: (b).The strain on the resources of the insurer must be minimum Explanation:In a year of catastrophe, the strain to the resources of the insurer must be minimum provided the programme takes care of this aspect. The programme should be designed to provide a stable experience to the net account and give a sufficient balance at each year-end provided the gross rates are adequate. A cash loss recovery facility is administered in all outward arrangements to eliminate the strain arising from the substantial gross payments needed to be made immediately in respect of risks which are retained marginally.

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Q. In a year of catastrophe, the reinsurance programme should be designed in such a manner that ________________
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