Question

Why does the absence of retrocessional support exert significant influence on the rate quoted by lead underwriter as the primary reinsurer?

a.

Because the lead underwriter is taking on more risk

b.

Because the lead underwriter is not able to spread the risk out

c.

Because the lead underwriter is not able to make as much profit

d.

Both a and b

Answer: (d).Both a and b Explanation:The absence of retrocessional support means that the lead underwriter is taking on more risk. This is because they are not able to spread the risk out to other reinsurers. As a result, they are not able to make as much profit and they are more likely to quote a higher rate.

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Q. Why does the absence of retrocessional support exert significant influence on the rate quoted by lead underwriter as the primary reinsurer?

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