Law and Clauses Relating to Reinsurance Contracts MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Law and Clauses Relating to Reinsurance Contracts, 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 Law and Clauses Relating to Reinsurance Contracts 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 Law and Clauses Relating to Reinsurance Contracts mcq questions that explore various aspects of Law and Clauses Relating to Reinsurance Contracts problems. Each MCQ is crafted to challenge your understanding of Law and Clauses Relating to Reinsurance Contracts 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 Law and Clauses Relating to Reinsurance Contracts MCQs are your pathway to success in mastering this essential IC85 Reinsurance Management topic.

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Law and Clauses Relating to Reinsurance Contracts MCQs | Page 10 of 19

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Q91.
What caused undue hardship to ceding insurers and their insured's in relation to terrorism and sabotage risks?

a.

Attachment of individual cessions

b.

Exclusions of war and nuclear risks

c.

Retrocessions of inward treaty reinsurances

d.

Reinsurers' exclusion of terrorism and sabotage risks

Discuss
Answer: (d).Reinsurers' exclusion of terrorism and sabotage risks Explanation:The exclusion of terrorism and sabotage risks by reinsurers in September 2001 caused undue hardship to ceding insurers and their insured's.
Q92.
Why are obligatory reinsurances and retrocessions of inward treaty reinsurances excluded under the "Business Covered: Attachment of cessions - proportional" clause?

a.

They are very different from direct or facultative business

b.

They involve accumulations of risk

c.

They are not covered by automatic reinsurance arrangements

d.

They are restricted to specific categories of risks

Discuss
Answer: (a).They are very different from direct or facultative business Explanation:Obligatory reinsurances and retrocessions of inward treaty reinsurances are excluded under the "Business Covered: Attachment of cessions - proportional" clause because they constitute a class by themselves and are very different from direct or facultative business.
Q93.
Which type of reinsurance is more akin to direct business and therefore not excluded under the "Business Covered: Attachment of cessions - proportional" clause?

a.

Accumulations of risk

b.

Quota share reinsurance

c.

Surplus reinsurance

d.

Facultative reinsurance

Discuss
Answer: (d).Facultative reinsurance Explanation:Facultative reinsurance is more akin to direct business and hence not excluded under the "Business Covered: Attachment of cessions - proportional" clause.
Q94.
What does the "Business Covered: Insuring clause non-proportional" clause specify?

a.

The amount of the deductible

b.

The reinsurer's limit of liability

c.

The basis on which the reinsurance applies

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The "Business Covered: Insuring clause non-proportional" clause specifies the amount of the deductible, the reinsurer's limit of liability, and the basis on which the reinsurance applies, which includes "each loss each risk" for risk excess of loss, "each loss occurrence" for catastrophe excess of loss, and "in the aggregate each annual period" for stop loss and aggregate excess of loss.
Q95.
What is the purpose of the deductible in non-proportional reinsurance?

a.

To determine the ceding insurer's recovery

b.

To limit the reinsurer's liability

c.

To define the basis of reinsurance application

d.

To calculate the annual aggregate

Discuss
Answer: (a).To determine the ceding insurer's recovery Explanation:The deductible in non-proportional reinsurance serves the purpose of determining the ceding insurer's recovery. A recovery is available only if the ceding insurer sustains a loss covered by the reinsurance that exceeds the deductible.
Q96.
Which basis of reinsurance application is linked to "each loss each risk"?

a.

Risk excess of loss

b.

Catastrophe excess of loss

c.

Stop loss and aggregate excess of loss

d.

None of the above

Discuss
Answer: (a).Risk excess of loss Explanation:The basis of reinsurance application linked to "each loss each risk" is risk excess of loss. Under this basis, there may be a maximum limit per loss occurrence.
Q97.
What is the purpose of the reinstatement provision in non-proportional reinsurance?

a.

To determine the deductible amount

b.

To define the basis of reinsurance application

c.

To limit the ceding insurer's recovery

d.

To provide additional coverage after a loss occurrence

Discuss
Answer: (d).To provide additional coverage after a loss occurrence Explanation:The reinstatement provision in non-proportional reinsurance is meant to provide additional coverage after a loss occurrence. It is often linked to the annual aggregate, allowing for further coverage once the aggregate limit has been reinstated.
Q98.
How do reinsurers on a layered excess of loss cover consider the deductible?

a.

Reinsurers consider the deductible for each layer of excess separately.

b.

Reinsurers consider the overall deductible for all layers collectively.

c.

Reinsurers disregard the deductible and focus on the limit of liability.

d.

Reinsurers adjust the deductible based on the ceding insurer's recovery.

Discuss
Answer: (a).Reinsurers consider the deductible for each layer of excess separately. Explanation:In layered excess of loss cover, each reinsurer considers the deductible only for their specific layer of excess. They are not concerned with the recoveries made by the ceding insurer from reinsurers of the underlying layers.
Q99.
Which aspect must be clearly stated in the "Business Covered: Insuring clause non-proportional" clause for layered excess of loss cover?

a.

The reinstatement provision for each layer

b.

The overall limit of liability for all layers

c.

The position of the reinsurers for each layer

d.

The deductible for each layer

Discuss
Answer: (c).The position of the reinsurers for each layer Explanation:The "Business Covered: Insuring clause non-proportional" clause must clearly state the position of the reinsurers for each layer in the case of layered excess of loss cover. This ensures clarity regarding the responsibilities and liabilities of the reinsurers for each specific layer.
Q100.
What is the purpose of obtaining the consent of reinsurers when a ceding insurer introduces a change in its business approach?

a.

To maintain the continuity of the reinsurance agreement

b.

To increase the reinsurance premiums

c.

To renegotiate the terms of the reinsurance contract

d.

To terminate the reinsurance agreement

Discuss
Answer: (a).To maintain the continuity of the reinsurance agreement Explanation:When a ceding insurer introduces a change in its business approach, the consent of reinsurers is necessary to ensure the continuity of the reinsurance agreement. Reinsurers need to be informed and agree to any changes made during the currency of the contract.
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