Question

How are premiums calculated in reinsurance agreements?What is the purpose of a deposit premium in reinsurance agreements?

a.

Based on the ceding insurer's total net premium after ceding to proportional reinsurancesTo cover minimum premium requirements

b.

Based on the reinsurer's total net premium after ceding to proportional reinsurancesTo ensure timely payment of premiums

c.

Based on a fixed percentage of the ceding insurer's total premium incomeTo account for estimated total net premium

d.

Based on the reinsurer's estimated total premium incomeTo provide additional coverage for high-risk policies

Posted under IC85 Reinsurance Management

Answer: (a).Based on the ceding insurer's total net premium after ceding to proportional reinsurancesTo cover minimum premium requirements Explanation:Premiums in reinsurance agreements are calculated at a rate specified in the contract, which is applied to the ceding insurer's total net premium after ceding to proportional reinsurances.A deposit premium in reinsurance agreements is paid to cover minimum premium requirements, and it is subject to adjustment when the ceding insurer's final premium income is known.

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Q. How are premiums calculated in reinsurance agreements?What is the purpose of a deposit premium in reinsurance agreements?
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