Question

What is the purpose of a "Loss Ratio Stabilising Clause"?

a.

To stabilize the ratio of claims to premiums in reinsurance contracts

b.

To stabilize the ratio of losses paid to claims reported

c.

To stabilize the ratio of losses incurred to premiums earned

d.

To stabilize the ratio of loss reserves to total claims

Posted under IC85 Reinsurance Management

Answer: (c).To stabilize the ratio of losses incurred to premiums earned Explanation:The "Loss Ratio Stabilising Clause" is another term for "Stop Loss Reinsurance." It is used to stabilize the ratio of losses incurred to premiums earned.

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Q. What is the purpose of a "Loss Ratio Stabilising Clause"?
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