Question

Why is it unwise to place too large a share of the treaty with a reinsurer?

a.

It may result in administrative inconvenience.

b.

Reinsurers prefer smaller shares for ease of handling.

c.

It limits the participation of other reinsurers in the treaty.

d.

It decreases the financial stability of the reinsurer.

Answer: (a).It may result in administrative inconvenience. Explanation:Placing too large a share of the treaty with a reinsurer can be administratively inconvenient. Therefore, option a is the correct answer.

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Q. Why is it unwise to place too large a share of the treaty with a reinsurer?

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