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.

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Inward Reinsurance Business MCQs | Page 8 of 8

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Q71.
What are the IRDA Regulations regarding inward reinsurance business?

a.

All life and non-life insurers in India can write inward reinsurance business from other domestic insurers and from overseas.

b.

Only life insurers in India can write inward reinsurance business from other domestic insurers.

c.

Only non-life insurers in India can write inward reinsurance business from other domestic insurers.

d.

None of the above

Discuss
Answer: (a).All life and non-life insurers in India can write inward reinsurance business from other domestic insurers and from overseas. Explanation:The IRDA Regulations allow all life and non-life insurers in India to write inward reinsurance business from other domestic insurers and from overseas. This is to promote competition and to ensure that there is a wide range of options available to insurers in India.
Q72.
As per IRDA regulation, who among the following can write inward reinsurance business from overseas insurers?

a.

Only life insurance companies

b.

Only non life insurance companies

c.

Only general Insurance companies

d.

Both life and non life insurance companies

Discuss
Answer: (d).Both life and non life insurance companies Explanation:As per IRDA Regulations, both life and non-life insurers in India can write inward reinsurance business from overseas insurers. This means that insurance companies from both sectors are allowed to engage in inward reinsurance transactions with overseas insurers.
Q73.
Which of the following is an example of ‘short tail’ class of business?

a.

Property

b.

EAR

c.

Marine

d.

Liability

Discuss
Answer: (a).Property Explanation:In the given options, the class of business that falls under the category of "short tail" is property. Short tail refers to insurance lines where the claims are typically settled relatively quickly and the duration between policy inception and claim settlement is relatively short. Property insurance involves covering risks related to physical property, such as buildings, homes, and belongings, and the claims in property insurance are generally resolved in a shorter time frame compared to other classes of business like EAR (Erection All Risks), Marine, and Liability.
Q74.
Which of the following is a benefit derived from reciprocal trading?

a.

It enables the reinsurer to add to his net premiums and net profits

b.

It provides a wider spread for the net retained portfolio of the reinsurer with lowered losses, thus ensuring greater stability in underwriting surplus

c.

It enables the ceding insurer to add to his net premiums and net profits

d.

It provides a wider spread for the net retained profits/income of the reinsurer with an improved performance, thus ensuring greater stability in reciprocal trading

Discuss
Answer: (c).It enables the ceding insurer to add to his net premiums and net profits Explanation:One of the benefits derived from reciprocal trading is that it enables the ceding insurer to add to his net premiums and net profits. Reciprocal trading refers to the exchange of reinsurance treaties between insurers, where they mutually agree to share risks and premiums. By engaging in reciprocal trading, the ceding insurer can expand their net premiums and net profits by receiving premiums from other insurers for the risks they have ceded. This practice allows the ceding insurer to increase their business volume and financial gains.
Q75.
In which of the following business is Reciprocal reinsurance trading most popular?

a.

Accident/Liability

b.

Motor

c.

Property

d.

Fire and Hull

Discuss
Answer: (d).Fire and Hull Explanation:Reciprocal reinsurance trading is most prevalent in the fire and hull lines of business. The practice of reciprocal reinsurance trading is evident in the fire and hull lines, indicating that these specific classes of business commonly engage in reciprocal reinsurance arrangements.
Q76.
When market is hard, and there is no retrocession support, then what will be the repercussions?

a.

The absence of retrocession support exerts significant influence on the rate quoted by lead underwriter as the primary reinsurer.

b.

The absence of retrocession support exerts significant influence on the rate quoted by ceding insurer

c.

Lead underwriters yield to broker pressure to quote lower rates

d.

Lead underwriters yield to broker pressure to quote higher rates

Discuss
Answer: (b).The absence of retrocession support exerts significant influence on the rate quoted by ceding insurer Explanation:When the market is hard and there is no retrocession support, it means that the primary reinsurer does not have the option to transfer or share the risk with other reinsurers. As a result, the primary reinsurer may be more cautious and less willing to offer favorable terms to the ceding insurer. The absence of retrocession support puts the burden of risk solely on the primary reinsurer, which can lead to higher rates being quoted to the ceding insurer.
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