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.

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Introduction MCQs | Page 12 of 13

Discover more Topics under IC85 Reinsurance Management

Q111.
What are the advantages of reinsurance?

a.

Increase in net premiums and losses

b.

Concentration of losses in a shorter period of time

c.

Widely distributed incidence of loss

d.

Increase in the likelihood of accumulations within each line of business

Discuss
Answer: (c).Widely distributed incidence of loss Explanation:The advantages of reinsurance include widely distributed incidence of loss and control of accumulations within each line of business and between different lines.
Q112.
What is the capacity of an insurer to accept risks with reinsurance support?

a.

The same as without reinsurance support

b.

Greater than without reinsurance support

c.

Lesser than without reinsurance support

d.

Dependent on the type of reinsurance support provided

Discuss
Answer: (b).Greater than without reinsurance support Explanation:An insurer has more capacity to accept risk with reinsurance support, although the exposure needs to be restricted to a level commensurate with its own net resources.
Q113.
Which of the following is incorrect with respect to advantages of reinsurance?

a.

The net premiums and losses are stabilised over a shorter period of time

b.

An insurer cannot accept new and untested risk exposures with reinsurance

c.

The incidence of loss gets widely distributed

d.

The problem of accumulation within each line of business and between different lines is controlled

Discuss
Answer: (b).An insurer cannot accept new and untested risk exposures with reinsurance Explanation:The correct statement is "An insurer can accept new and untested risk exposures with reinsurance support".
Q114.
Which of the following statements about reinsurance is correct?

a.

Reinsurance is the insurance of the risk assumed by the insurer.

b.

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.

c.

Reinsurance is a separate contract between the insurer and the reinsurer. Each of these contracts is independent of the other.

d.

The relation between the insurer and the reinsurer is based on the principle of “Uberrima fides”, i.e. utmost good faith.

Discuss
Answer: (d).The relation between the insurer and the reinsurer is based on the principle of “Uberrima fides”, i.e. utmost good faith. Explanation:The principle of “Uberrima fides” means that both parties have to disclose all relevant information to each other, and it is a fundamental principle of insurance.
Q115.
Which of the following statements about the reinsurer is correct?

a.

The reinsurer only shares the “insurance fate” in other words; he is not affected by the insurer’s “commercial fate”.

b.

The reinsurer is responsible for handling claims made by policyholders.

c.

The reinsurer only enters into reinsurance contracts with policyholders.

d.

The reinsurer determines the premiums to be paid by policyholders.

Discuss
Answer: (a).The reinsurer only shares the “insurance fate” in other words; he is not affected by the insurer’s “commercial fate”. Explanation:The reinsurer only shares the “insurance fate” with the insurer, meaning that he is only responsible for covering losses related to the insured risk, and not losses related to the insurer's overall business.
Q116.
Which of the following statements about the history of reinsurance is correct?

a.

The first reinsurance contract in fire insurance business was concluded in 1821.

b.

Reinsurance has been used in the insurance industry since ancient times.

c.

The concept of reinsurance was first introduced in the 20th century.

d.

Reinsurance was originally developed as a way to avoid paying claims.

Discuss
Answer: (a).The first reinsurance contract in fire insurance business was concluded in 1821. Explanation:The first reinsurance contract in fire insurance business was concluded in 1821.
Q117.
Which of the following is true about GIC's handling of non-reciprocal inwards into India?

a.

GIC handled all non-reciprocal inwards into India through a division styled SWIFT, on behalf of itself and the four companies.

b.

GIC did not handle any non-reciprocal inwards into India after nationalisation.

c.

SWIFT is an acronym for "Single Window Indian Facultative and Treaty".

d.

GIC only handled reciprocal inwards into India.

Discuss
Answer: (a).GIC handled all non-reciprocal inwards into India through a division styled SWIFT, on behalf of itself and the four companies. Explanation:GIC handled all non-reciprocal inwards into India through a division styled SWIFT, on behalf of itself and the four companies. SWIFT is an acronym for "Single Window International Facultative and Treaty".
Q118.
Reinsurance is a contract between ______________and ___________________.

a.

Insurer and insured

b.

Insured and Underwriter

c.

Underwriter and reinsurer

d.

Insurer and reinsurer

Discuss
Answer: (d).Insurer and reinsurer Explanation:Reinsurance is a separate contract between the insurer and the reinsurer. Each of these contracts is independent of the other. The reinsurer agrees to indemnify the insurer for all or part of the risk underwritten by the latter.
Q119.
What is the obligation of a reinsurer when the ceding insurer is in financial difficulties or is insolvent?

a.

Reinsurer shares commercial fate, hence reinsurer will have to pay his full share of the same loss

b.

Reinsurer shares insurance fate, hence reinsurer will have to pay his full share of the same loss

c.

Reinsurer shares insurance fate, hence reinsurer will not have to pay his share of the same loss

d.

Reinsurer shares commercial fate, hence reinsurer will not have to pay his full share of the same loss

Discuss
Answer: (b).Reinsurer shares insurance fate, hence reinsurer will have to pay his full share of the same loss Explanation:When a ceding insurer is in financial difficulties or is insolvent, the reinsurer's obligation to pay remains unchanged. Reinsurance is a contract between the insurer and the reinsurer, and the reinsurer assumes a portion of the risk underwritten by the insurer. Therefore, if the insurer becomes insolvent, the reinsurer's obligation to pay is not affected and they will have to pay their full share of the same loss. Reinsurers share the "insurance fate" but not the "commercial fate" of the ceding insurer.
Q120.
In 1966, the Indian Insurance Companies Association initiated the formation of Reinsurance Pools in __________ to increase the retained premiums in the country.

a.

Marine

b.

Fire and Hull

c.

Vehicle

d.

Health

Discuss
Answer: (b).Fire and Hull Explanation:In 1966, the Indian Insurance Companies Association initiated the formation of Reinsurance Pools in Fire and Hull to increase the retained premiums in the country.
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