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.

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IRDA and its Licensing Functions MCQs | Page 13 of 20

Discover more Topics under IC 14 Regulations of Insurance Business

Q121.
Who certifies the profile of the reinsurance programme for life insurers according to the IRDA (Life Insurance – Reinsurance Regulations) 2000?

a.

CEO of the insurance company

b.

Chief Financial Officer (CFO) of the insurance company

c.

Appointed Actuary

d.

Regulatory Affairs Officer

Discuss
Answer: (c).Appointed Actuary Explanation:The profile of the reinsurance programme for life insurers, duly certified by the Appointed Actuary, should be filed with the Authority.
Q122.
What action can the Authority take regarding the reinsurance programme filed by a life insurer as per the IRDA (Life Insurance – Reinsurance Regulations) 2000?

a.

It cannot suggest any changes to the programme.

b.

It can suggest changes, and the insurer must incorporate them immediately.

c.

It can reject the programme.

d.

It can ignore the filed programme.

Discuss
Answer: (b).It can suggest changes, and the insurer must incorporate them immediately. Explanation:The Authority can suggest changes to the reinsurance programme, and the insurer must incorporate those changes immediately.
Q123.
What is the requirement regarding the maintenance of retention by general insurers according to the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

Maximum retention is not specified.

b.

Maximum retention should be 50% of the total business volume.

c.

Maximum retention should be commensurate with the financial strength and volume of business.

d.

Maximum retention should be at least 75% of the total business volume.

Discuss
Answer: (c).Maximum retention should be commensurate with the financial strength and volume of business. Explanation:General insurers should maintain the maximum possible retention commensurate with their financial strength and volume of business.
Q124.
What may the Authority require an insurer to justify regarding its retention policy according to the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

Justify the reduction in retention.

b.

Justify the increase in retention.

c.

Justify the decision to involve foreign reinsurers.

d.

Justify the decision to involve domestic reinsurers.

Discuss
Answer: (b).Justify the increase in retention. Explanation:The Authority may require an insurer to justify its retention policy, especially if there is an increase in retention.
Q125.
What does every insurer need to cede according to the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

A fixed percentage of the premium income.

b.

A fixed percentage of the total assets.

c.

A percentage of the sum assured on each policy for different classes of insurance.

d.

A percentage of the total business volume.

Discuss
Answer: (c).A percentage of the sum assured on each policy for different classes of insurance. Explanation:Every insurer should cede a percentage of the sum assured on each policy for different classes of insurance, as specified by the Authority.
Q126.
What is the requirement for the credit rating of reinsurers chosen by the insurer, as per the IRDA (Life Insurance – Reinsurance Regulations) 2000?

a.

A minimum credit rating of AAA is required.

b.

A minimum credit rating of BBB of Standard and Poor or equivalent is required.

c.

The credit rating is not specified.

d.

The reinsurer's credit rating is not a consideration.

Discuss
Answer: (b).A minimum credit rating of BBB of Standard and Poor or equivalent is required. Explanation:The reinsurer chosen by the insurer should have a credit rating of a minimum of BBB of Standard and Poor or an equivalent rating from any international rating agency.
Q127.
Under what conditions can an insurer place reinsurance business with a reinsurer without prior approval from the Authority, according to the IRDA (Life Insurance – Reinsurance Regulations) 2000?

a.

It can place business with any reinsurer without approval.

b.

It can place business with any reinsurer if the reinsurer has a credit rating of AAA.

c.

It can place business with any reinsurer only if the reinsurer has a credit rating below BBB.

d.

It can place business with any reinsurer with the prior approval of the Authority.

Discuss
Answer: (d).It can place business with any reinsurer with the prior approval of the Authority. Explanation:Placement of business with any reinsurer requires the prior approval of the Authority.
Q128.
What is the condition for a life insurer to have a reinsurance treaty arrangement with its promoter company or its associate/group company according to the IRDA (Life Insurance – Reinsurance Regulations) 2000?

a.

No approval is needed for such arrangements.

b.

It is prohibited to have such arrangements.

c.

Approval is needed, and the terms should be competitive in the market.

d.

Approval is needed, but the terms are not a consideration.

Discuss
Answer: (c).Approval is needed, and the terms should be competitive in the market. Explanation:A life insurer can have a reinsurance treaty arrangement with its promoter company or its associate/group company only with the prior approval of the Authority, and the terms should be commercially competitive in the market.
Q129.
What information should every insurer submit to the Authority regarding its reinsurance transactions, according to the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

Only the names of reinsurers.

b.

Statistics related to reinsurance transactions in forms specified by the Authority.

c.

Annual premium income.

d.

Only the details of excess of loss cover notes.

Discuss
Answer: (b).Statistics related to reinsurance transactions in forms specified by the Authority. Explanation:Every insurer should submit to the Authority statistics relating to its reinsurance transactions in forms specified by the Authority, together with its annual accounts.
Q130.
What is the timeframe for every insurer to file reinsurance treaty slips and excess of loss cover notes with the Authority, according to the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

Within 15 days of the commencement of the financial year.

b.

Within 30 days of the commencement of the financial year.

c.

Within 45 days of the commencement of the financial year.

d.

Within 60 days of the commencement of the financial year.

Discuss
Answer: (b).Within 30 days of the commencement of the financial year. Explanation:Every insurer should file with the Authority a photocopy of every reinsurance treaty slip and excess of loss cover note within 30 days of the commencement of the financial year.
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