Question

In inward reinsurance business, why is retrocession required?

a.

For formulating terms and condition of agreement

b.

To enable acceptance of economical lines

c.

For indemnifying excess of loss

d.

F or mutual exchange of risk

Answer: (b).To enable acceptance of economical lines Explanation:Retrocession is required to enable the acceptance of economical lines in inward reinsurance business. Retrocession allows the accepting insurer or reinsurer to transfer a part of their acceptance to another reinsurer, thereby reducing their exposure and allowing them to accept larger lines of business that might otherwise be unaffordable or risky to retain solely. Retrocession helps in spreading the risk and making the acceptance of larger lines possible.

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Q. In inward reinsurance business, why is retrocession required?

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