Reinsurance MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Reinsurance, a fundamental topic in the field of IC22 Life Insurance Underwriting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Reinsurance 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 mcq questions that explore various aspects of Reinsurance problems. Each MCQ is crafted to challenge your understanding of Reinsurance principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC22 Life Insurance Underwriting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Reinsurance MCQs are your pathway to success in mastering this essential IC22 Life Insurance Underwriting topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Reinsurance. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Reinsurance knowledge to the test? Let's get started with our carefully curated MCQs!

Reinsurance MCQs | Page 2 of 9

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Q11.
Which of the following is not true about the regulations regarding reinsurers in India?

a.

Reinsurers cannot do direct insurance business like a direct insurance company.

b.

Reinsurers cannot receive and process life insurance applications from the applicants directly.

c.

The IRDA has a clear set of guidelines for the reinsurers that include the objectives and the scope of their business in India.

d.

Reinsurers can do direct insurance business like a direct insurance company.

Discuss
Answer: (d).Reinsurers can do direct insurance business like a direct insurance company. Explanation:The Indian regulations specify that a reinsurer cannot do direct insurance business like a direct insurance company, i.e. the reinsurer cannot receive and process life insurance applications from the applicants directly like the direct insurer.
Q12.
Which industry did the concept of reinsurance come into being with?

a.

Life insurance

b.

Health insurance

c.

Property insurance

d.

Marine insurance

Discuss
Answer: (d).Marine insurance Explanation:The concept of reinsurance came into being with marine insurance.
Q13.
Which of the following is not a reinsurer for life-insurance in India?

a.

Swiss-Re

b.

Munich-Re

c.

R.G.A (Reinsurance Group of America)

d.

All of the above are reinsurers for life-insurance in India.

Discuss
Answer: (d).All of the above are reinsurers for life-insurance in India. Explanation:Some of the reinsurers in India for life-insurance are Swiss-Re, Munich-Re, R.G.A (Reinsurance Group of America), General Cologne Re, and Hannover Re.
Q14.
What expertise do the reinsurers have in their teams?

a.

Actuarial, claims, and underwriting expertise

b.

Marketing and sales expertise

c.

Legal and regulatory expertise

d.

Financial and accounting expertise

Discuss
Answer: (a).Actuarial, claims, and underwriting expertise Explanation:The reinsurers have in their teams very competent technical professionals who are experts in actuarial, claims, underwriting, etc. who provide technical expertise to all the direct insurers whom they are associated with.
Q15.
Why might an insurer sign reinsurance arrangements or treaties with multiple reinsurers?

a.

To limit the liability of the reinsurer.

b.

To reduce the cost of reinsurance.

c.

To spread the risk.

d.

To avoid having to pay claims.

Discuss
Answer: (c).To spread the risk. Explanation:The reinsurance arrangements or treaties may be signed by an insurer with multiple reinsurers, as this helps in spreading the risk.
Q16.
What does the reinsurer promise to do?

a.

Pay the full premium paid by the policyholder.

b.

Pay the proportionate amount of any claims insured under the policy.

c.

Deduct any commission from the premium paid by the policyholder.

d.

Not pay any claims insured under the policy.

Discuss
Answer: (b).Pay the proportionate amount of any claims insured under the policy. Explanation:The reinsurer takes a proportion of the premium paid by the policyholder after deduction of any commission and promises to pay the proportionate amount of any claims insured under the policy.
Q17.
What is the need for reinsurance?

a.

To minimise the financial impact of death claims on a direct insurer

b.

To increase the profitability of the direct insurer

c.

To reduce the amount of premium paid by the policyholders

d.

To eliminate the need for a direct insurer

Discuss
Answer: (a).To minimise the financial impact of death claims on a direct insurer Explanation:The need for reinsurance is to minimise the financial impact of death claims on a direct insurer.
Q18.
How is the risk/liability shared between the direct insurer and the reinsurer?

a.

The direct insurer takes on all the risk/liability

b.

The reinsurer takes on all the risk/liability

c.

The risk/liability is shared proportionately between the direct insurer and the reinsurer

d.

The risk/liability is shared equally between the direct insurer and the reinsurer

Discuss
Answer: (c).The risk/liability is shared proportionately between the direct insurer and the reinsurer Explanation:The risk/liability is shared proportionately between the direct insurer and the reinsurer.
Q19.
What is the retention limit?

a.

The amount of premium paid by the policyholder

b.

The amount of risk/liability taken on by the reinsurer

c.

The amount of liability which a direct insurance company takes on

d.

The amount of profit made by the direct insurer

Discuss
Answer: (c).The amount of liability which a direct insurance company takes on Explanation:The retention limit is the amount of liability which a direct insurance company takes on.
Q20.
How do reinsurance arrangements help small upcoming insurance companies?

a.

By eliminating the need for reinsurance

b.

By increasing the amount of premium paid by the policyholders

c.

By spreading their financial risks suitably to the reinsurers

d.

By reducing the profitability of the direct insurer

Discuss
Answer: (c).By spreading their financial risks suitably to the reinsurers Explanation:Reinsurance arrangements help small upcoming insurance companies by spreading their financial risks suitably to the reinsurers.
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