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 8 of 8

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Q71.
What does the direct insurer retain in a reinsurance arrangement?

a.

Premiums paid by policyholders

b.

Fixed amount of cover per life

c.

All risks associated with the policies

d.

Administrative costs of processing claims

Discuss
Answer: (b).Fixed amount of cover per life Explanation:In a reinsurance arrangement, the direct insurer retains a fixed amount of cover per life, known as the retention amount, and transfers the remaining risks to the reinsurer.
Q72.
Which of the following is NOT an advantage of reinsurance?

a.

Minimization of losses

b.

Efficient utilization of capital

c.

Increase in regulatory requirements

d.

Underwriting guidance

Discuss
Answer: (c).Increase in regulatory requirements Explanation:Reinsurance helps minimize losses, efficiently utilize capital, and provides underwriting guidance. It does not increase regulatory requirements.
Q73.
What are some considerations before implementing reinsurance?

a.

Cost of reinsurance, retention limits, counterparty risk

b.

Market competition, advertising strategy, employee benefits

c.

Customer preferences, product development, technological advancements

d.

Legal regulations, accounting principles, tax implications

Discuss
Answer: (a).Cost of reinsurance, retention limits, counterparty risk Explanation:Considerations before reinsurance include the cost of reinsurance, retention limits, and counterparty risk, among others.
Q74.
What types of reinsurance arrangements exist?

a.

Surplus and deficit reinsurance

b.

Compulsory and optional reinsurance

c.

Facultative and obligatory reinsurance

d.

Short-term and long-term reinsurance

Discuss
Answer: (c).Facultative and obligatory reinsurance Explanation:Reinsurance arrangements include facultative and obligatory reinsurance, depending on the obligations of the parties involved.
Q75.
Who determines the best retention limits in a reinsurance arrangement?

a.

Policyholders

b.

Insurance agents

c.

Insurer's actuary

d.

Reinsurer's underwriter

Discuss
Answer: (c).Insurer's actuary Explanation:The insurer's actuary determines the best retention limits in a reinsurance arrangement based on various factors.
Q76.
How do reinsurance regulations impact insurance companies?

a.

They have no impact on insurance companies.

b.

They increase premiums for policyholders.

c.

They regulate the minimum retention limits for insurers.

d.

They restrict insurers from offering certain products.

Discuss
Answer: (c).They regulate the minimum retention limits for insurers. Explanation:Reinsurance regulations can impact insurance companies by regulating the minimum retention limits they must maintain.
Q77.
In a reinsurance contract, the excess of the total amount of cover (T) over the retention amount (X) would be ____________ .

a.

Passed on to the insurer

b.

Passed on to the re-insurer

c.

Borne by the insurer and re-insurer in agreed proportion

d.

Retained by the insured

Discuss
Answer: (b).Passed on to the re-insurer Explanation:The retention amount is the amount of cover retained by the direct insurer. The excess of the total amount of cover (T) over the retention amount (X) would be passed on to the re-insurer.
Q78.
The excess loss method of reinsurance is more predominant in which of the following types of insurance?

a.

General insurance business

b.

Life insurance business

c.

Mutual insurance business

d.

All of the above

Discuss
Answer: (a).General insurance business Explanation:The excess loss method of reinsurance is more predominant in general insurance business. In the case of reinsurance in life business, it is unusual to have excess loss method. Options c and d are also incorrect.
Q79.
While choosing retention limits, an insurer’s actuary would consider which of the following?

a.

Time period for which insurer has been in insurance business

b.

Solvency requirements with regard to reinsurance

c.

All of the above

d.

None of the above

Discuss
Answer: (c).All of the above Explanation:Both the factors: (a) time period for which insurer has been in insurance business and (b) solvency requirements with regard to reinsurance would be considered by the insurer while choosing retention limits.
Q80.
Retention limits would be lower for high risk plans and higher for low risk plans. High risks would be on account of which of the following?

a.

Standard lives

b.

Sub-standard lives

c.

Savings plans

d.

None of the above

Discuss
Answer: (b).Sub-standard lives Explanation:High risks would be on account of sub-standard lives. The other options are incorrect.
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