Inward Reinsurance Business MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Inward Reinsurance Business, 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 Inward Reinsurance Business 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 Inward Reinsurance Business mcq questions that explore various aspects of Inward Reinsurance Business problems. Each MCQ is crafted to challenge your understanding of Inward Reinsurance Business 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 Inward Reinsurance Business 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 Inward Reinsurance Business. 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 Inward Reinsurance Business knowledge to the test? Let's get started with our carefully curated MCQs!

Inward Reinsurance Business MCQs | Page 4 of 8

Discover more Topics under IC85 Reinsurance Management

Q31.
Which factor is important to consider when determining the territorial scope of reinsurance business?

a.

Lower costs associated with domestic business

b.

Familiarity with the local market

c.

Geographical spread of business

d.

Avoiding business from certain countries for political reasons

Discuss
Answer: (c).Geographical spread of business Explanation:If one wants a better geographical spread, they have to write foreign business. This indicates that the territorial scope is an important consideration for reinsurance business.
Q32.
Which markets may an insurer or reinsurer wish to avoid for political or economic reasons?

a.

U.S. and Canadian markets

b.

Domestic markets

c.

Overseas markets

d.

Markets with lower costs

Discuss
Answer: (c).Overseas markets Explanation:In overseas markets, the insurer or reinsurer may wish to avoid business from certain countries for political reasons or economic unsatisfactoriness.
Q33.
Why might a new entrant in the reinsurance business start with domestic business?

a.

Lower costs associated with domestic business

b.

Familiarity with the local market

c.

Gradual enlargement of geographical scope

d.

Avoiding business from certain countries

Discuss
Answer: (b).Familiarity with the local market Explanation:A new entrant will probably start with domestic business because the underwriter will be more familiar with the local market.
Q34.
Why might an insurer or reinsurer initially prefer to write only short-tail business?

a.

Lower costs associated with short-tail business

b.

Familiarity with the local market for short-tail business

c.

Extent of claims in long-tail business is unknown for many years

d.

Higher profitability in short-tail business

Discuss
Answer: (c).Extent of claims in long-tail business is unknown for many years Explanation:In long-tail business, the extent of claims will not be known for many years and can unexpectedly have a significant impact in the future. This uncertainty may lead an insurer or reinsurer to initially prefer writing only short-tail business.
Q35.
What are the potential hazards associated with granting underwriting or binding authority to another insurer or agency?

a.

Writing a large volume of premium regardless of quality

b.

Exceeding the granted authority

c.

Involvement in difficulties

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Granting underwriting or binding authority to another insurer or agency can lead to hazards such as writing a large volume of premium regardless of quality, exceeding the granted authority, and involving the insurer or reinsurer in difficulties.
Q36.
Why might some reinsurers have reservations about participating in pools and brokers' covers?

a.

Lack of control over the quality of business

b.

Higher costs associated with pools and brokers' covers

c.

Excessive commission fees charged by brokers

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Some reinsurers may have reservations about participating in pools and brokers' covers due to factors such as lack of control over the quality of business, higher costs, and excessive commission fees charged by brokers.
Q37.
What are the two options for writing inward reinsurance in terms of intermediaries?

a.

Direct basis or through brokers

b.

Direct basis only

c.

Through brokers only

d.

Pools or brokers' covers

Discuss
Answer: (a).Direct basis or through brokers Explanation:It is to be decided whether acceptances will be made on a direct basis or through the intermediary of a broker or both. This indicates that an insurer or reinsurer can choose to write inward reinsurance directly or through brokers.
Q38.
What is a potential advantage of writing business on a direct basis?

a.

Extensive world-wide contacts of brokers

b.

Lower costs associated with direct writing

c.

Greater control over the quality of business

d.

Higher commission fees earned by the insurer

Discuss
Answer: (c).Greater control over the quality of business Explanation:Writing business on a direct basis allows for greater control over the quality of business. This suggests that maintaining direct relationships with clients can provide advantages in ensuring the quality of the accepted business.
Q39.
How do insurers or reinsurers typically approach writing inward business when starting out?

a.

Mainly through brokers and developing direct contacts

b.

Mainly on a direct basis and later through brokers

c.

Mainly through pools and brokers' covers

d.

Mainly by granting underwriting or binding authority

Discuss
Answer: (a).Mainly through brokers and developing direct contacts Explanation:Insurers or reinsurers starting to write inward business will do so mainly through brokers and also try to develop their direct contacts. This suggests that initially relying on brokers is a common approach, while also working towards establishing direct relationships.
Q40.
What should the acceptance limit of a reinsurer be based on?

a.

Financial standing of the reinsurer

b.

Premium income of the reinsurer

c.

Relationship with ceding insurers and brokers

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The acceptance limit of a reinsurer should be based on factors such as the financial standing of the reinsurer, the premium income of the reinsurer, and its relationship with ceding insurers and brokers.
Page 4 of 8