Question

What is the purpose of accepting inward reinsurance business for an insurer?

a.

To decrease net retained premium

b.

To increase the expense ratio

c.

To maintain a lower expense ratio

d.

To reduce the net premium income

Answer: (c).To maintain a lower expense ratio Explanation:Insurers may accept inward reinsurance business to maintain a lower expense ratio. By accepting inward reinsurance, they can increase their net premium income and offset the impact of outward cessions, which would otherwise reduce the gross direct premium income and lead to a higher expense ratio on the net premium.

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Q. What is the purpose of accepting inward reinsurance business for an insurer?

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