Question

Which of the following is a benefit derived from reciprocal trading?

a.

It enables the reinsurer to add to his net premiums and net profits

b.

It provides a wider spread for the net retained portfolio of the reinsurer with lowered losses, thus ensuring greater stability in underwriting surplus

c.

It enables the ceding insurer to add to his net premiums and net profits

d.

It provides a wider spread for the net retained profits/income of the reinsurer with an improved performance, thus ensuring greater stability in reciprocal trading

Posted under IC85 Reinsurance Management

Answer: (c).It enables the ceding insurer to add to his net premiums and net profits Explanation:One of the benefits derived from reciprocal trading is that it enables the ceding insurer to add to his net premiums and net profits. Reciprocal trading refers to the exchange of reinsurance treaties between insurers, where they mutually agree to share risks and premiums. By engaging in reciprocal trading, the ceding insurer can expand their net premiums and net profits by receiving premiums from other insurers for the risks they have ceded. This practice allows the ceding insurer to increase their business volume and financial gains.

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Q. Which of the following is a benefit derived from reciprocal trading?
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