Question

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

a.

By assuming that 50% of the premiums are unexpired at the end of the year

b.

By dividing the premiums into 50 equal parts for each month of the year

c.

By deducting a commission of 30% from the gross portfolio

d.

By considering alterations in the composition of the business portfolio

Posted under IC85 Reinsurance Management

Answer: (a).By assuming that 50% of the premiums are unexpired at the end of the year Explanation:The portfolio transfer percentage of 35% to 40% is determined using the "50% Method" by assuming that approximately 50% of the premiums are unexpired at the end of the year.

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