Question

Which of the following is not a primary objective of reinsurance?

a.

To safeguard the solvency of an insurer against random fluctuations in the overall claims experience and an accumulation of losses arising out of one event

b.

To secure technical assistance in rating, terms and conditions of cover and processing of claims

c.

To stabilise any fluctuation in the company’s annual aggregate claims experience so that wide fluctuations in results from one year to the next are avoided

d.

To ensure that it is not placed at a serious disadvantage compared to its competitors

Answer: (b).To secure technical assistance in rating, terms and conditions of cover and processing of claims Explanation:To secure technical assistance in rating, terms and conditions of cover and processing of claims is not a primary objective of reinsurance. While it may be a secondary benefit, the primary objectives of reinsurance are to safeguard the solvency of an insurer against random fluctuations in the overall claims experience and an accumulation of losses arising out of one event, to stabilise any fluctuation in the company's annual aggregate claims experience, and to ensure that the insurer is not placed at a serious disadvantage compared to its competitors.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. Which of the following is not a primary objective of reinsurance?

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is the significance of follow-up in a reinsurance programme?

Q. What is the purpose of a reinsurance programme for insurance business?

Q. What is the basis for design and follow-up of a reinsurance programme?

Q. What is the purpose of a cash loss recovery facility in outward arrangements?

Q. What is the basic role of reinsurance?

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

Q. What is the correct approach for the evaluation of outward arrangements?

Q. What is the primary purpose of reinsurance?

Q. What is the purpose of the cash loss recovery facility in outward arrangements?

Q. In a year of catastrophe, what must the programme design take care of?

Q. What helps the insurer to keep their well invested funds intact in situations where substantial gross payments need to be made immediately in respect of risks which are retained marginally?

Q. What does the programme design address in addition to providing a stable experience to the net account and giving a sufficient balance at each year end?

Q. In order to eliminate the strain arising from immediate gross payments in respect of risks which are retained marginally, what is administered in all outward arrangements?

Q. In ________________ business, a mix of risks producing a broad based premium and giving a good treaty balance, yielding fairly sustained positive results over a period of time is needed.

Q. What is the basis for determining the economics of each reinsurance arrangement?

Q. Why is it necessary to review the working of reinsurance arrangements each year?

Q. What is the purpose of reinsurance?

Q. What is needed for a ceding arrangement for reciprocal business?

Q. How should reinsurance cessations be evaluated for outward arrangements?

Q. How should reinsurance cessations be evaluated for outward arrangements?What factors should be considered when determining the economics of each ceding arrangement?

Recommended Subjects

Are you eager to expand your knowledge beyond IC85 Reinsurance Management? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!