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 5 of 9

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Q41.
When is facultative reinsurance generally used?

a.

When the total death benefit in force is within the limits of the reinsurance treaty

b.

When the direct company wants to retain the risk

c.

When the total death benefit in force and that applied for exceed the limits as defined in the reinsurance treaty

d.

When there are no risks that have been excluded under the treaty arrangements

Discuss
Answer: (c).When the total death benefit in force and that applied for exceed the limits as defined in the reinsurance treaty Explanation:Facultative reinsurance is generally used when the total death benefit in force and that applied for exceed the limits as defined in the reinsurance treaty.
Q42.
In which situations is facultative reinsurance used?

a.

When the direct company wants to obtain the business and retain the risk

b.

When the total death benefit in force is within the limits of the reinsurance treaty

c.

When the direct company wants to obtain the business but does not want to retain the risk

d.

When there are no risks that have been excluded under the treaty arrangements

Discuss
Answer: (c).When the direct company wants to obtain the business but does not want to retain the risk Explanation:Facultative reinsurance is used in situations where the direct company wants to obtain the business but does not want to retain the risk.
Q43.
What problems can arise if facultative business with the reinsurer is not renewed?

a.

The reinsurer will be liable for paying claims

b.

The direct insurer will be liable for paying claims

c.

There will be no problems as the treaty arrangements will cover all risks

d.

The reinsurer and direct insurer will share liability for paying claims

Discuss
Answer: (b).The direct insurer will be liable for paying claims Explanation:Non-renewal of facultative business with the reinsurer can create problems for the direct insurer as regards to the liability of paying claims.
Q44.
What is facultative shopping?

a.

When the direct company wants to retain the risk

b.

When the reinsurer decides to accept all risks referred to them

c.

When the case is sent to more than one reinsurer and the most competitive offer is chosen by the insurance company

d.

When the reinsurer automatically accepts all risks referred to them

Discuss
Answer: (c).When the case is sent to more than one reinsurer and the most competitive offer is chosen by the insurance company Explanation:Facultative shopping is when the case is sent to more than one reinsurer, and the reinsurer who gives the most competitive offer is chosen by the insurance company.
Q45.
What is facultative reinsurance?

a.

It is reinsurance at an individual risk level

b.

It is reinsurance at a portfolio level

c.

It is a type of treaty reinsurance

d.

It is an automatic reinsurance arrangement

Discuss
Answer: (a).It is reinsurance at an individual risk level Explanation:Facultative reinsurance is a method of reinsurance where the risk is assessed at an individual basis.
Q46.
When is facultative reinsurance generally used?

a.

When the total death benefit in force and applied for exceed the limits defined in the reinsurance treaty

b.

When the direct company wants to retain the risk

c.

When the direct insurer wishes to obtain the business but does not want to retain the risk

d.

None of the above

Discuss
Answer: (c).When the direct insurer wishes to obtain the business but does not want to retain the risk Explanation:Facultative reinsurance is generally used by the direct insurer when they wish to obtain the business but do not want to retain the risk.
Q47.
What is "facultative shopping"?

a.

When the reinsurer automatically accepts the risk of the direct insurer

b.

When the direct insurer sends the case to more than one reinsurer and chooses the most competitive offer

c.

When the reinsurer declines the risk

d.

None of the above

Discuss
Answer: (b).When the direct insurer sends the case to more than one reinsurer and chooses the most competitive offer Explanation:Facultative shopping is a term used in the facultative type of reinsurance, where the case may be sent to more than one reinsurer and the reinsurer who gives the most competitive offer is chosen by the insurance company.
Q48.
What is treaty reinsurance?

a.

It is reinsurance at an individual risk level

b.

It is reinsurance at a portfolio level

c.

It is a type of facultative reinsurance

d.

It is an automatic reinsurance arrangement

Discuss
Answer: (b).It is reinsurance at a portfolio level Explanation:Treaty reinsurance is a method of reinsurance where the risk is assessed at a portfolio level.
Q49.
What is the main difference between facultative and treaty reinsurance?

a.

In facultative reinsurance, the reinsurer has no option to decline the risk, whereas in treaty reinsurance, the reinsurer can decline the risk.

b.

In facultative reinsurance, the risk is assessed at an individual basis, whereas in treaty reinsurance, the risk is assessed at a portfolio level.

c.

In facultative reinsurance, the reinsurer has to accept the risk of the direct insurance company, whereas in treaty reinsurance, the reinsurer can decline the risk.

d.

None of the above.

Discuss
Answer: (b).In facultative reinsurance, the risk is assessed at an individual basis, whereas in treaty reinsurance, the risk is assessed at a portfolio level. Explanation:The main difference between facultative and treaty reinsurance is that in facultative reinsurance, the risk is assessed at an individual basis, whereas in treaty reinsurance, the risk is assessed at a portfolio level.
Q50.
What is Catastrophe reinsurance?

a.

Reinsurance that protects against mortality risks due to natural disasters

b.

Reinsurance that covers a large block of individuals on an individual basis

c.

Reinsurance that protects against catastrophes of large mortality claims coming at a single point of time

d.

Reinsurance that covers losses due to theft or fraud

Discuss
Answer: (c).Reinsurance that protects against catastrophes of large mortality claims coming at a single point of time Explanation:Catastrophe reinsurance protects the insurance companies against catastrophes of large mortality claims coming at a single point of time.
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