IRDA and its Licensing Functions MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on IRDA and its Licensing Functions, a fundamental topic in the field of IC 14 Regulations of Insurance Business. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our IRDA and its Licensing Functions MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of IRDA and its Licensing Functions mcq questions that explore various aspects of IRDA and its Licensing Functions problems. Each MCQ is crafted to challenge your understanding of IRDA and its Licensing Functions principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 14 Regulations of Insurance Business tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our IRDA and its Licensing Functions MCQs are your pathway to success in mastering this essential IC 14 Regulations of Insurance Business topic.

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IRDA and its Licensing Functions MCQs | Page 12 of 20

Discover more Topics under IC 14 Regulations of Insurance Business

Q111.
Why do insurance companies engage in reinsurance?

a.

To avoid issuing policies

b.

To reduce premiums for policyholders

c.

To share risk and prevent financial losses

d.

To monopolize the insurance market

Discuss
Answer: (c).To share risk and prevent financial losses Explanation:Insurance companies engage in reinsurance to share risk with other insurers, preventing financial losses and maintaining solvency.
Q112.
What type of risks do reinsurance contracts primarily deal with?

a.

Routine and predictable risks

b.

Catastrophic risks

c.

Financial risks

d.

Operational risks

Discuss
Answer: (b).Catastrophic risks Explanation:Reinsurance contracts primarily deal with catastrophic risks, which are highly unpredictable and can cause significant damage.
Q113.
What are the fundamental objectives of reinsurance?

a.

Maximize competition among insurers

b.

Minimize retention within the country

c.

Simplify the administration of business

d.

Share risk, develop capacity, and secure cost-effective protection

Discuss
Answer: (d).Share risk, develop capacity, and secure cost-effective protection Explanation:The fundamental objectives of reinsurance include sharing risk, developing capacity, and securing the best possible protection for the reinsurance costs incurred.
Q114.
What is a subtle difference between life and general insurance regarding reinsurance?

a.

Life insurance requires higher premiums

b.

General insurance mandates statutory cession to GIC Re

c.

Life insurance always involves catastrophic risks

d.

General insurance does not involve Incurred But Not Reported (IBNR) claims

Discuss
Answer: (b).General insurance mandates statutory cession to GIC Re Explanation:In general insurance, statutory cession to GIC Re is prescribed, while it is not for life insurance business.
Q115.
What does IBNR stand for in the insurance context?

a.

Incurred But Not Required

b.

Injured But Not Reported

c.

Incurred But Not Recognized

d.

Incurred But Not Reported

Discuss
Answer: (d).Incurred But Not Reported Explanation:IBNR refers to losses that have occurred but have not yet been reported to the insurance company.
Q116.
How do insurance companies handle IBNR?

a.

They ignore IBNR losses

b.

They use objective estimates to recognize IBNR losses

c.

They wait for policyholders to report losses

d.

They reject claims related to IBNR

Discuss
Answer: (b).They use objective estimates to recognize IBNR losses Explanation:Insurance companies use subjective estimates to recognize IBNR losses since the actual value of these losses is unknown.
Q117.
What is the primary purpose of the Reinsurance Programme for general insurance?

a.

Minimize retention within the country

b.

Maximize competition among insurers

c.

Develop inadequate capacity

d.

Secure the best possible protection for reinsurance costs

Discuss
Answer: (d).Secure the best possible protection for reinsurance costs Explanation:The primary purpose of the Reinsurance Programme for general insurance is to secure the best possible protection for reinsurance costs incurred.
Q118.
According to the General Insurance Reinsurance Regulations, what is one objective of the Reinsurance Programme?

a.

Maximize retention within the country

b.

Develop inadequate capacity

c.

Maximize competition among insurers

d.

Simplify the administration of business

Discuss
Answer: (a).Maximize retention within the country Explanation:One objective of the Reinsurance Programme for general insurance is to maximize retention within the country.
Q119.
What is the common objective shared by both Life and General Reinsurance Regulations?

a.

Maximize competition among insurers

b.

Develop adequate capacity

c.

Minimize retention within the country

d.

Simplify the administration of business

Discuss
Answer: (b).Develop adequate capacity Explanation:Developing adequate capacity is a common objective shared by both Life and General Reinsurance Regulations.
Q120.
What is the requirement regarding the filing of the reinsurance programme by life insurers according to the IRDA (Life Insurance – Reinsurance Regulations) 2000?

a.

It should be filed 30 days before the commencement of each financial year.

b.

It should be filed at least 60 days before the commencement of each financial year.

c.

It should be filed at least 45 days before the commencement of each financial year.

d.

It should be filed within the first quarter of each financial year.

Discuss
Answer: (c).It should be filed at least 45 days before the commencement of each financial year. Explanation:The reinsurance programme for life insurers should be filed at least 45 days before the commencement of each financial year.
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