Question

How does Risk premium reinsurance work?

a.

The reinsurer sets premium rates based on the insurer's assessment of risk

b.

The reinsurer determines premium rates independently

c.

The insurer guarantees premium rates for the term of the policy

d.

The reinsurer assumes all risks without any input from the insurer

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (a).The reinsurer sets premium rates based on the insurer's assessment of risk Explanation:In Risk premium reinsurance, the insurer reinsures part of the sum assured or the sum at risk based on the reinsurer's risk premium basis, which may or may not be guaranteed for the policy term.

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