Alternatives to Traditional Reinsurance MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Alternatives to Traditional Reinsurance, a fundamental topic in the field of IC85 Reinsurance Management. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Alternatives to Traditional Reinsurance MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Alternatives to Traditional Reinsurance MCQs | Page 12 of 12

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Q111.
Which of the following is a technique of risk management?

a.

Risk transfer

b.

Risk retention group

c.

Risk retention financing

d.

Asset management

Discuss
Answer: (a).Risk transfer Explanation:Risk transfer is a technique of risk management where the risk is transferred from one party to another. It involves transferring the financial consequences of potential losses to an insurance company or another entity through the purchase of insurance policies or other risk transfer mechanisms. This allows the party transferring the risk to mitigate their exposure and protect their financial interests. Risk retention group and risk retention financing are specific strategies or approaches within risk management, while asset management refers to the professional management of investments and is not directly related to risk transfer.
Q112.
Market terrorism pool is an example of which of the following alternative carriers?

a.

Self insurance

b.

Risk Retention group

c.

Pool

d.

Captive

Discuss
Answer: (c).Pool Explanation:Market terrorism pool is an example of a pool, which is one of the alternative carriers in risk management. Pools are collaborative arrangements where multiple entities come together to share and distribute risk. In the case of a market terrorism pool, insurers and reinsurers join forces to pool their resources and collectively cover the risk associated with terrorism-related losses. This approach allows for a more efficient and effective management of the risk by spreading it across multiple participants. Self-insurance refers to an entity assuming its own risks, risk retention group is a specific type of insurance group, and captive is a type of insurance company owned by the entity it insures.
Q113.
____________refers to the professional management of investments such as stocks and bonds along with real estate, set realistic goals to increase the insurer`s / reinsurer`s wealth and measure the performance.

a.

Risk Retention financing

b.

Self insurance

c.

Captive

d.

Asset management

Discuss
Answer: (d).Asset management Explanation:Asset management refers to the professional management of investments such as stocks, bonds, and real estate. It involves making strategic investment decisions with the goal of increasing the wealth of an insurer or reinsurer. Asset managers analyze market trends, evaluate investment opportunities, and allocate funds to different asset classes to achieve optimal returns. They set realistic goals aligned with the financial objectives of the insurance company, monitor the performance of the portfolio, and make adjustments as needed. Asset management plays a crucial role in maximizing the profitability and financial stability of insurers and reinsurers. Risk retention financing, self-insurance, and captive are alternative risk management strategies or structures, but they are not directly related to asset management.
Q114.
_____________is a device to transfer a part of business by an insurer to another insurer or reinsurer for a specified period and to appropriate the fund obtained by a transfer of business for policy reserves to strengthen its financial position

a.

Finite risk

b.

Contingent capital

c.

Financial reinsurance

d.

Multi-trigger cover

Discuss
Answer: (c).Financial reinsurance Explanation:Financial reinsurance is a device used by an insurer to transfer a portion of its business to another insurer or reinsurer for a specific period. The purpose of this transfer is to appropriate the funds obtained from the transfer of business to strengthen the insurer's financial position, particularly its policy reserves. Financial reinsurance helps the insurer manage its risk exposure and enhance its capital adequacy by shifting some of the liabilities associated with the transferred business to the reinsurer. This arrangement allows the insurer to free up capital and improve its financial stability.
Q115.
__________ is a contract to pay back to the insurer the negative balance in his business as pre-agreed with the reinsurer.

a.

Time and distance policy

b.

Spread loss

c.

Loss portfolio transfer

d.

Swaps

Discuss
Answer: (b).Spread loss Explanation:Spread loss is a contract to pay back to the insurer negative balance in his business as pre-agreed with the reinsurer.
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