Introduction MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Introduction, 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 Introduction 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 Introduction mcq questions that explore various aspects of Introduction problems. Each MCQ is crafted to challenge your understanding of Introduction principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC85 Reinsurance Management tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Introduction MCQs are your pathway to success in mastering this essential IC85 Reinsurance Management topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Introduction. 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 Introduction knowledge to the test? Let's get started with our carefully curated MCQs!

Introduction MCQs | Page 1 of 13

Discover more Topics under IC85 Reinsurance Management

Q1.
What is the economic basis of insurance?

a.

The accuracy of probability of loss keeps improving as the population of insured assets or persons or interests grows.

b.

The larger the population of insured assets or persons or interests, the more difficult it is to predict the probability of loss.

c.

Insurance is based on the occurrence of loss affecting a small population.

d.

Insurance is based on the occurrence of loss affecting a large population.

Discuss
Answer: (a).The accuracy of probability of loss keeps improving as the population of insured assets or persons or interests grows. Explanation:The economic basis of insurance is that the occurrence of loss affects a fraction of a large population. The larger the population of insured assets or persons or interests, the accuracy of probability of loss keeps improving.
Q2.
What enables the insurer to cope with variations in the pattern of actual losses?

a.

Probability theory

b.

Dispersion measures

c.

Working capital

d.

Shareholders' funds

Discuss
Answer: (a).Probability theory Explanation:Probability theory enables the insurer to cope with variations in the pattern of actual losses.
Q3.
What is the role of underwriters and actuaries in setting premiums or assessing liabilities?

a.

They consider various measures of dispersion.

b.

They rely on a cushion of working capital.

c.

They preserve the income from investment.

d.

They ensure insurers always have a sufficient margin of assets over estimated liabilities.

Discuss
Answer: (a).They consider various measures of dispersion. Explanation:Underwriters and actuaries may consider various measures of dispersion, that is the difference between the actual losses and average losses, when setting premiums or assessing liabilities.
Q4.
What are some scenarios that insurers must be prepared to accept the risk associated with?

a.

Catastrophes like earthquake or tsunami

b.

Accumulation of many losses

c.

Simple lack of financial capacity

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Insurance companies have to be prepared to accept the risk associated with various scenarios such as catastrophes like earthquake, tsunami, or accumulation of many losses, or simple lack of financial capacity.
Q5.
What is one of the main aims of insurance regulators?

a.

To ensure that insurers always have a sufficient margin of assets over estimated liabilities appropriate to the business that they conduct.

b.

To increase the income from investment.

c.

To reduce the risk associated with catastrophic events.

d.

To reduce the need for reinsurance.

Discuss
Answer: (a).To ensure that insurers always have a sufficient margin of assets over estimated liabilities appropriate to the business that they conduct. Explanation:One of the main aims of insurance regulators is to ensure that insurers always have a sufficient margin of assets over estimated liabilities appropriate to the business that they conduct.
Q6.
What is reinsurance?

a.

A contract of indemnity

b.

A contract of guaranty

c.

A contract of suretyship

d.

A contract of bailment

Discuss
Answer: (a).A contract of indemnity Explanation:Reinsurance is always a contract of indemnity, even in life and personal accident insurance, because it protects the insurer from a diminution of his property caused by insurance policy obligations.
Q7.
What is the technical risk in reinsurance?

a.

Improper business administration

b.

An unjustified, exaggerated, or fraudulent claim

c.

The risk of granting cover through an insurance policy

d.

The risk of inefficient technical attention

Discuss
Answer: (c).The risk of granting cover through an insurance policy Explanation:The technical risk in reinsurance mainly concerns the risk of granting cover through an insurance policy.
Q8.
What is the contractual risk in reinsurance?

a.

Improper business administration

b.

An unjustified, exaggerated, or fraudulent claim

c.

The risk of granting cover through an insurance policy

d.

The risk of inefficient technical attention

Discuss
Answer: (b).An unjustified, exaggerated, or fraudulent claim Explanation:The contractual risk in reinsurance refers to an unjustified, exaggerated, or fraudulent claim made by the insured.
Q9.
What is the "Follow the Fortunes" clause in reinsurance?

a.

A clause that covers the technical risk

b.

A clause that covers the contractual risk

c.

A clause that covers the risks emanating from the insurer or the reinsurer

d.

A clause that indemnifies the reinsurer for losses incurred by the insurer

Discuss
Answer: (d).A clause that indemnifies the reinsurer for losses incurred by the insurer Explanation:The "Follow the Fortunes" clause in reinsurance indemnifies the reinsurer for losses incurred by the insurer.
Q10.
Which of the following can increase the risk run by the reinsurer?

a.

Deficient underwriting methods

b.

Excessive generosity in the settlement of claims

c.

Hasty development of business and inefficient technical attention

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Deficient underwriting methods, excessive generosity in the settlement of claims, and hasty development of business and inefficient technical attention can all increase the risk run by the reinsurer.
Page 1 of 13