Reinsurance Support MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Reinsurance Support, a fundamental topic in the field of IC 92 Actuarial Aspects of Product Development. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Reinsurance Support 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 Reinsurance Support mcq questions that explore various aspects of Reinsurance Support problems. Each MCQ is crafted to challenge your understanding of Reinsurance Support principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 92 Actuarial Aspects of Product Development tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Reinsurance Support MCQs are your pathway to success in mastering this essential IC 92 Actuarial Aspects of Product Development topic.

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Reinsurance Support MCQs | Page 5 of 8

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Q41.
What is Excess of loss reinsurance?

a.

A type of reinsurance where the reinsurer agrees to pay any loss on an individual risk

b.

A type of reinsurance where the reinsurer agrees to pay aggregate loss from any one occurrence of an event

c.

A type of reinsurance where the reinsurer agrees to pay for losses exceeding a certain threshold

d.

A type of reinsurance where the reinsurer agrees to pay only for catastrophic events

Discuss
Answer: (c).A type of reinsurance where the reinsurer agrees to pay for losses exceeding a certain threshold Explanation:Excess of loss reinsurance involves the reinsurer agreeing to pay for losses exceeding a certain predetermined threshold.
Q42.
What distinguishes catastrophe reinsurance from stop loss reinsurance?

a.

Catastrophe reinsurance pays out for individual risks, while stop loss reinsurance pays aggregate losses for a portfolio.

b.

Catastrophe reinsurance has no predefined threshold, while stop loss reinsurance has a predetermined retention.

c.

Catastrophe reinsurance pays for losses exceeding a predetermined retention, while stop loss reinsurance pays for losses from catastrophic events.

d.

Catastrophe reinsurance caps the portfolio's loss for a given time period, while stop loss reinsurance pays for losses from catastrophic events.

Discuss
Answer: (a).Catastrophe reinsurance pays out for individual risks, while stop loss reinsurance pays aggregate losses for a portfolio. Explanation:Catastrophe reinsurance pays out for individual risks defined in the contract, while stop loss reinsurance pays aggregate losses for a portfolio over a given time period.
Q43.
How is excess of loss reinsurance organized into different levels?

a.

By categorizing losses based on occurrence of events

b.

By defining different thresholds for losses

c.

By retaining a portion of losses and reinsuring the excess at different prices

d.

By setting a limit on the maximum loss payable by the reinsurer

Discuss
Answer: (c).By retaining a portion of losses and reinsuring the excess at different prices Explanation:Excess of loss reinsurance is organized into different levels by retaining a portion of losses and reinsuring the excess at different prices.
Q44.
What is the purpose of catastrophe reinsurance?

a.

To cap the portfolio's loss for a given time period

b.

To pay for losses exceeding a predetermined threshold

c.

To pay for losses from catastrophic events defined in the contract

d.

To pay aggregate net loss over a predetermined retention for a portfolio

Discuss
Answer: (c).To pay for losses from catastrophic events defined in the contract Explanation:Catastrophe reinsurance pays for losses from catastrophic events defined in the contract, such as a minimum number of deaths occurring within a specified time period.
Q45.
How does stop loss reinsurance work?

a.

It pays for individual risks exceeding a predetermined threshold.

b.

It pays for losses from catastrophic events occurring within a specified time period.

c.

It pays aggregate net loss over a predetermined retention for a portfolio.

d.

It caps the portfolio's loss for a given time period.

Discuss
Answer: (c).It pays aggregate net loss over a predetermined retention for a portfolio. Explanation:Stop loss reinsurance pays aggregate net loss over a predetermined retention for a portfolio, capping the portfolio's loss for a given time period.
Q46.
What is Excess of Loss reinsurance?

a.

Reinsurance where the reinsurer pays any loss on an individual risk below a predetermined retention

b.

Reinsurance where the reinsurer pays any loss on an individual risk in excess of a predetermined retention

c.

Reinsurance where the reinsurer pays the aggregate net loss over a predetermined retention for a portfolio

d.

Reinsurance where the reinsurer pays for losses from specific catastrophic events

Discuss
Answer: (b).Reinsurance where the reinsurer pays any loss on an individual risk in excess of a predetermined retention Explanation:Excess of Loss reinsurance involves the reinsurer paying any loss on an individual risk in excess of a predetermined retention.
Q47.
What is Catastrophe reinsurance?

a.

Reinsurance where the reinsurer pays any loss on an individual risk below a predetermined retention

b.

Reinsurance where the reinsurer pays for losses from specific catastrophic events

c.

Reinsurance where the reinsurer pays the aggregate net loss over a predetermined retention for a portfolio

d.

Reinsurance where the reinsurer pays for losses from any one occurrence of an event exceeding a predetermined retention

Discuss
Answer: (b).Reinsurance where the reinsurer pays for losses from specific catastrophic events Explanation:Catastrophe reinsurance involves the reinsurer paying for losses from specific catastrophic events as defined in the reinsurance contract.
Q48.
What is Stop Loss reinsurance?

a.

Reinsurance where the reinsurer pays any loss on an individual risk below a predetermined retention

b.

Reinsurance where the reinsurer pays for losses from specific catastrophic events

c.

Reinsurance where the reinsurer pays the aggregate net loss over a predetermined retention for a portfolio

d.

Reinsurance where the reinsurer pays for losses from any one occurrence of an event exceeding a predetermined retention

Discuss
Answer: (c).Reinsurance where the reinsurer pays the aggregate net loss over a predetermined retention for a portfolio Explanation:Stop Loss reinsurance involves the reinsurer paying the aggregate net loss over a predetermined retention for a portfolio over a given time period.
Q49.
What is Financial reinsurance primarily used for?

a.

To cover losses from specific catastrophic events

b.

To release economic assets like Value in Force for cash equivalent assets

c.

To reinsure individual risks below a predetermined retention

d.

To reinsure losses exceeding a predetermined retention for a portfolio

Discuss
Answer: (b).To release economic assets like Value in Force for cash equivalent assets Explanation:Financial reinsurance is primarily used to trade economic assets like Value in Force for cash equivalent assets that can be used elsewhere in the business.
Q50.
What are the two main types of reinsurance based on obligation?

a.

Facultative and Catastrophe reinsurance

b.

Financial and Excess of Loss reinsurance

c.

Catastrophe and Stop Loss reinsurance

d.

Facultative and Obligatory reinsurance

Discuss
Answer: (d).Facultative and Obligatory reinsurance Explanation:The two main types of reinsurance based on obligation are Facultative and Obligatory reinsurance.
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