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 14 of 20

Discover more Topics under IC 14 Regulations of Insurance Business

Q131.
What is the minimum rating required for reinsurers outside India, as per the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

AAA

b.

BBB

c.

AA

d.

No minimum rating is specified.

Discuss
Answer: (b).BBB Explanation:Insurers shall place their reinsurance business outside India with only those reinsurers who have, over the past five years, enjoyed a rating of at least BBB (with Standard & Poor) or an equivalent rating of any other international rating agency.
Q132.
When can insurers place reinsurance with other reinsurers without requiring the approval of the Authority, according to the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

Only when the reinsurer has a minimum rating of AAA.

b.

Only when the reinsurer has a minimum rating of BBB.

c.

Only when the reinsurer is Lloyd’s syndicates.

d.

Placements with other reinsurers always require the approval of the Authority.

Discuss
Answer: (d).Placements with other reinsurers always require the approval of the Authority. Explanation:Placements with other reinsurers, apart from those meeting the specified rating criteria or Lloyd's syndicates, require the approval of the Authority.
Q133.
What is the limit for placing surplus over and above domestic reinsurance arrangements with any one reinsurer, as per the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

5% of the total reinsurance premium ceded outside India.

b.

10% of the total reinsurance premium ceded outside India.

c.

15% of the total reinsurance premium ceded outside India.

d.

No limit is specified.

Discuss
Answer: (b).10% of the total reinsurance premium ceded outside India. Explanation:Surplus over and above the domestic reinsurance arrangements class-wise can be placed by the insurer independently with any reinsurer complying with the specified rating criteria, subject to a limit of 10% of the total reinsurance premium ceded outside India being placed with any one reinsurer.
Q134.
Under what conditions can an insurer place a share exceeding the specified limit with a particular reinsurer, according to the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

Only with the approval of the Authority.

b.

Only if the reinsurer has a minimum rating of AAA.

c.

Only if the reinsurer is Lloyd's syndicates.

d.

No conditions are specified.

Discuss
Answer: (a).Only with the approval of the Authority. Explanation:If it is necessary to cede a share exceeding the specified limit to any particular reinsurer, the insurer may seek the specific approval of the Authority, giving reasons for such cession.
Q135.
According to the IRDA (General Insurance – Reinsurance Regulations) 2000, what percentage of obligatory cessions received by the Indian Reinsurer must be retroceded to ceding insurers, and what is the maximum overriding commission allowed?

a.

25%, Maximum overriding commission of 1.5%

b.

50%, Maximum overriding commission of 2.5%

c.

75%, Maximum overriding commission of 3.5%

d.

100%, No maximum overriding commission specified

Discuss
Answer: (b).50%, Maximum overriding commission of 2.5% Explanation:The Indian Reinsurer shall retrocede at least 50% of the obligatory cessions received by it to the ceding insurers after protecting the portfolio by suitable excess of loss covers. The retrocession shall be at original terms plus an overriding commission to the Indian Reinsurer not exceeding 2.5%.
Q136.
What opportunity must every insurer offer to other Indian insurers, including the Indian Reinsurer, according to the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

Opportunity to invest in the insurer's business.

b.

Opportunity to participate in its surplus before placement outside India.

c.

Opportunity to offer reinsurance services.

d.

Opportunity to become a majority shareholder in the insurer.

Discuss
Answer: (b).Opportunity to participate in its surplus before placement outside India. Explanation:Every insurer shall offer an opportunity to other Indian insurers, including the Indian Reinsurer, to participate in its facultative and treaty surpluses before placement of such cessions outside India.
Q137.
What information must every insurer submit to the Authority, as per the IRDA (General Insurance – Reinsurance Regulations) 2000?

a.

Monthly financial statements.

b.

Quarterly market reports.

c.

Statistics relating to its reinsurance transactions and annual accounts.

d.

Annual employee performance reports.

Discuss
Answer: (c).Statistics relating to its reinsurance transactions and annual accounts. Explanation:Every insurer shall be required to submit to the Authority statistics relating to its reinsurance transactions in such forms as it may specify, together with its annual accounts.
Q138.
According to the Life Insurance and General Insurance Reinsurance Regulations, what is the requirement for insurers wanting to write inward reinsurance business regarding underwriting policy?

a.

Insurers are not required to have a defined underwriting policy for inward reinsurance business.

b.

They must file their underwriting policy with the Authority after 30 days of the financial year.

c.

A well-defined underwriting policy is required, and any changes must be filed with the Authority.

d.

They should have an underwriting policy, but changes are not required to be filed with the Authority.

Discuss
Answer: (c).A well-defined underwriting policy is required, and any changes must be filed with the Authority. Explanation:Every insurer wanting to write inward reinsurance business shall have a well-defined underwriting policy for underwriting inward reinsurance business. The insurer shall file with the Authority a note on its underwriting policy, stating the classes of business, geographical scope, underwriting limits, and profit objective. Any changes to the note must be filed as and when a change in the underwriting policy is made.
Q139.
Who should make decisions on the acceptance of reinsurance business, according to the Life Insurance and General Insurance Reinsurance Regulations?

a.

Junior underwriters.

b.

External consultants.

c.

Persons with adequate knowledge and experience.

d.

Marketing executives.

Discuss
Answer: (c).Persons with adequate knowledge and experience. Explanation:Insurers should ensure that decisions on the acceptance of reinsurance business are made by persons with adequate knowledge and experience, preferably in consultation with the insurer's appointed actuary.
Q140.
How often must insurers file changes to their underwriting policy with the Authority, as per the Life Insurance and General Insurance Reinsurance Regulations?

a.

Once every financial year.

b.

Once every two financial years.

c.

Anytime during the financial year.

d.

As and when a change in underwriting policy is made.

Discuss
Answer: (d).As and when a change in underwriting policy is made. Explanation:Insurers must file any changes to the note on their underwriting policy with the Authority as and when a change in underwriting policy is made.
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