Question

What is the alternative method to allowing the cessions to run to their natural expiry in the event of treaty cancellation?

a.

Portfolio transfer

b.

Clean cut method

c.

Natural expiration transfer

d.

Multiplicity of accounts method

Answer: (a).Portfolio transfer Explanation:The alternative method to allowing the cessions to run to their natural expiry is the portfolio transfer or clean cut method.

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Q. What is the alternative method to allowing the cessions to run to their natural expiry in the event of treaty cancellation?

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Explore Relevant Multiple Choice Questions (MCQs)

Q. Why is the portfolio transfer or clean cut method preferred over the natural expiry method?

Q. What is the portfolio transfer method used for in reinsurance?

Q. Why is the portfolio transfer method not always used for valuing portfolios?

Q. What percentage of the premiums of the previous year is typically used for portfolio transfer in surplus and quota share treaties?

Q. How is the portfolio transfer percentage of 35% to 40% determined using the "50% Method"?

Q. What are the "eighth," "twelfth," and "twenty-fourth" systems used for in the calculation of portfolio premium?

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Q. Which method provides a more accurate calculation of the net portfolio premium?

Q. What is the approximate percentage of the premium ceded to the treaty that works out as portfolio withdrawal?

Q. How does the calculation for unexpired risks in financial accounting differ from the portfolio withdrawal calculation?

Q. What is the purpose of the clean-cut method in reinsurance?

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Q. When is the clean-cut method typically followed?

Q. What happens to premium reserves in the clean-cut method?

Q. What is the range of interest that ceding insurers allow reinsurers in treaties with provision for retention of reserves?

Q. When is the interest credited to reinsurers in treaties with provision for retention of reserves?

Q. How is the net return to the reinsurer affected by tax regulations?

Q. What is the nature of accounts under non-proportional treaties?

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