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 6 of 8

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Q51.
What is the primary characteristic of the surplus arrangement in reinsurance?

a.

The reinsurer shares only a portion of the premium with the insurer

b.

The reinsurer shares only the sum at risk, calculated by the reinsurer, with the insurer

c.

The reinsurer shares both the premium and the sum at risk with the insurer

d.

The reinsurer shares only the premium with the insurer

Discuss
Answer: (b).The reinsurer shares only the sum at risk, calculated by the reinsurer, with the insurer Explanation:In the surplus arrangement, the reinsurer shares only the sum at risk, calculated by the reinsurer, with the insurer.
Q52.
How is the reinsurance premium calculated in the surplus arrangement?

a.

By multiplying the sum assured by a fixed rate

b.

By multiplying the sum at risk by the insurer's mortality charge

c.

By multiplying the sum at risk by a fixed rate

d.

By multiplying the sum assured by the insurer's mortality charge

Discuss
Answer: (b).By multiplying the sum at risk by the insurer's mortality charge Explanation:The reinsurance premium in the surplus arrangement is calculated by multiplying the sum at risk by the insurer's mortality charge.
Q53.
Why do insurers generally prefer the surplus method over the quota share method?

a.

Because the reinsurance premium outflow is higher in the surplus method

b.

Because the reinsurance premium outflow is lower in the surplus method

c.

Because the surplus method offers more comprehensive coverage

d.

Because the surplus method involves less administrative burden for insurers

Discuss
Answer: (b).Because the reinsurance premium outflow is lower in the surplus method Explanation:Insurers generally prefer the surplus method over the quota share method because the reinsurance premium outflow is lower in the surplus method.
Q54.
What is a 'declined lives' treaty in reinsurance?

a.

A treaty where the reinsurer declines to provide coverage for certain types of lives

b.

A treaty where the reinsurer accepts lives declined by the insurer with additional premium

c.

A treaty where the insurer declines to provide coverage for certain types of lives

d.

A treaty where both the insurer and reinsurer decline to provide coverage for certain types of lives

Discuss
Answer: (b).A treaty where the reinsurer accepts lives declined by the insurer with additional premium Explanation:A 'declined lives' treaty is a treaty where the reinsurer accepts lives declined by the insurer with additional premium.
Q55.
What defines a declined life in reinsurance?

a.

A life declined by the reinsurer due to high risk

b.

A life declined by both the insurer and reinsurer due to high risk

c.

A life declined by the insurer but accepted by the reinsurer with extra premium

d.

A life declined by the reinsurer but accepted by the insurer with extra premium

Discuss
Answer: (c).A life declined by the insurer but accepted by the reinsurer with extra premium Explanation:A declined life in reinsurance is a life declined by the insurer but accepted by the reinsurer with extra premium.
Q56.
What is the maximum percentage of the sum assured that insurers are required to reinsure with Indian reinsurers, as per IRDAI regulations?

a.

20%

b.

25%

c.

30%

d.

35%

Discuss
Answer: (c).30% Explanation:IRDAI regulations specify that insurers shall reinsure with Indian reinsurers such a percentage of the sum assured on each policy, which shall not exceed thirty percent.
Q57.
What requirement must insurers fulfill regarding reinsurance arrangements for catastrophe risks?

a.

Ensure adequate reinsurance arrangements for catastrophe risks without any specific approval

b.

Obtain approval from the Authority for reinsurance arrangements for catastrophe risks

c.

Only provide reinsurance arrangements for catastrophe risks if specifically requested by the Board of Directors

d.

Include reinsurance arrangements for catastrophe risks in the annual report without prior approval

Discuss
Answer: (b).Obtain approval from the Authority for reinsurance arrangements for catastrophe risks Explanation:Insurers must ensure that reinsurance arrangements for catastrophe risks are adequate and approved by the Board of Directors before filing them with the Authority.
Q58.
When are insurers allowed to reinsure on quota share according to IRDAI regulations?

a.

Only in the first year of starting operations

b.

In the initial two years of starting operations for all types of insurance business

c.

In the initial two years of starting operations for health insurance business and group term insurance business

d.

In the initial two years of introducing a new risks/product for health insurance business and group term insurance business

Discuss
Answer: (d).In the initial two years of introducing a new risks/product for health insurance business and group term insurance business Explanation:Insurers may be allowed to reinsure on quota share in the initial two years of introducing a new risks/product for health insurance business and group term insurance business, according to IRDAI regulations.
Q59.
What requirement must insurers fulfill regarding retention policy according to IRDAI regulations?

a.

Formulate a retention policy only once during the initial years of operation

b.

Submit the retention policy to the Authority without any justification

c.

Formulate a suitable retention policy for each type of product/risk and justify it in the annual reinsurance programme submitted to the Authority

d.

Retain the same level of risk for all products without any adjustments

Discuss
Answer: (c).Formulate a suitable retention policy for each type of product/risk and justify it in the annual reinsurance programme submitted to the Authority Explanation:Insurers must formulate a suitable retention policy for each type of product/risk and justify it in the annual reinsurance programme submitted to the Authority, according to IRDAI regulations.
Q60.
What is the maximum percentage of the sum assured that an insurer shall reinsure with Indian reinsurers according to IRDAI regulations?

a.

20%

b.

30%

c.

40%

d.

50%

Discuss
Answer: (b).30% Explanation:According to IRDAI regulations, every insurer shall reinsure with Indian reinsurers such percentage of the sum assured on each policy as may be specified by the Authority, provided that the specified percentage shall not exceed thirty percent of the sum assured on such policy.
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