Question

How do retention limits influence the decision to reinsure?

a.

By decreasing regulatory capital requirements

b.

By minimizing familiarity with underwriting

c.

By increasing profit-sharing arrangements

d.

By impacting the stability of free asset ratio

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (d).By impacting the stability of free asset ratio Explanation:Retention limits influence the decision to reinsure by impacting the stability of the insurer's free asset ratio, among other factors such as insurance risk appetite, free assets level, and regulatory capital requirements.

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Q. How do retention limits influence the decision to reinsure?
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