Question

What is a major problem faced by a reinsurer when closing proportional treaty accounts?

a.

Difficulty in estimating outstanding provisions for claims

b.

Delays in the preparation and rendering of treaty accounts

c.

Inability to match accounted figures with treaty year results

d.

All of the above

Answer: (d).All of the above Explanation:Closing proportional treaty accounts poses a major problem for a reinsurer due to the difficulty in estimating outstanding provisions for claims, delays in the preparation and rendering of treaty accounts, and the challenge of matching accounted figures with treaty year results. These factors make it challenging for the reinsurer to ascertain the profit or loss on each acceptance when closing the financial year.

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Q. What is a major problem faced by a reinsurer when closing proportional treaty accounts?

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