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 5 of 13

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Q41.
What delayed Lloyd's entry into the reinsurance field?

a.

Its focus on marine insurance.

b.

Its lack of specialized insurers.

c.

Its lack of demand for reinsurance.

d.

Its restrictive legislation.

Discuss
Answer: (d).Its restrictive legislation. Explanation:Lloyd's entry into the reinsurance field was delayed by the restrictive legislation of 1746.
Q42.
What type of reinsurance was introduced by Cuthbert Heath at Lloyd's of London?

a.

Proportional reinsurance.

b.

Excess of loss reinsurance.

c.

Facultative reinsurance.

d.

Treaty reinsurance.

Discuss
Answer: (b).Excess of loss reinsurance. Explanation:Cuthbert Heath introduced excess of loss reinsurance at Lloyd's of London.
Q43.
What is the significance of reinsurance for insurers?

a.

It enables them to accept only those risks that they can handle.

b.

It helps them establish a certain balance in their portfolio.

c.

It allows them to avoid competition with other insurers.

d.

It reduces their dependence on direct business.

Discuss
Answer: (b).It helps them establish a certain balance in their portfolio. Explanation:Reinsurance helps insurers establish a certain balance in their portfolio.
Q44.
What was the initial form of reinsurance?

a.

Proportional treaties

b.

Automatic treaties

c.

Facultative transactions

d.

Excess of loss cover

Discuss
Answer: (c).Facultative transactions Explanation:Initially reinsurance business was confined to facultative transactions.
Q45.
When did proportional treaties become the main form of reinsurance?

a.

In the 19th century

b.

By the time of World War I

c.

In 1850

d.

In 1900

Discuss
Answer: (b).By the time of World War I Explanation:By the time of World War I, proportional treaties became the main vehicle of reinsurance replacing facultative reinsurance.
Q46.
What is excess of loss cover?

a.

A form of reinsurance for property policies which were extended to cover catastrophe hazards

b.

A form of reinsurance that replaced facultative reinsurance

c.

An automatic form of reinsurance

d.

An indispensable part of an insurer’s operations today

Discuss
Answer: (a).A form of reinsurance for property policies which were extended to cover catastrophe hazards Explanation:The invention and technique of excess of loss cover was the most significant development in reinsurance in the past 100 years. This form of reinsurance filled a real gap for property policies which were extended to cover catastrophe hazards.
Q47.
What was the cause of the growing importance of reinsurance companies?

a.

Increase in the number of insurance companies following extraordinary economic development

b.

Evolution that started with the industrial revolution

c.

Increase in the value at risk and the concentration of values

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The cause of this phenomenon must be found in an evolution which started with the industrial revolution and accelerated at a quicker pace. On the one hand, the value at risk increased and on the other, these values became more concentrated. The increase in the number of insurance companies following extraordinary economic development is not the only explanation for the growing importance of reinsurance companies.
Q48.
What is the advantage of reinsurance for new insurance markets?

a.

Local investors often prefer more lucrative short-term activities than insurance

b.

New markets have a small volume of premium and low retention capacity

c.

New markets can make extensive use of reinsurance

d.

both b and c

Discuss
Answer: (d).both b and c Explanation:Local companies in new markets often have a smaller financial base because local investors often prefer more lucrative short-term activities than insurance. Moreover, new markets have a small volume of premium and low retention capacity, and they make extensive use of reinsurance.
Q49.
What was the main reason for the development of reinsurance in India?

a.

Rapid economic development

b.

Large scale insurance business

c.

Foreign exchange conservation

d.

Government direction

Discuss
Answer: (b).Large scale insurance business Explanation:The rapid development of insurance business in India led to an increased need for reinsurance protection.
Q50.
When was India Reinsurance Corporation formed?

a.

1956

b.

1961

c.

1966

d.

1951

Discuss
Answer: (a).1956 Explanation:India Reinsurance Corporation was formed in 1956 by general insurance companies operating in India.
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