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 15 of 19

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Q141.
How does the Company determine the claim period in case a catastrophe involves multiple insured perils?

a.

The Company chooses the period based on the highest loss value

b.

The Company selects the period based on the earliest recorded individual loss

c.

The Company divides the catastrophe into separate Loss Occurrences for each insured peril

d.

The Company follows a predetermined schedule for claim period determination

Discuss
Answer: (b).The Company selects the period based on the earliest recorded individual loss Explanation:In case a catastrophe involves multiple insured perils, the Company determines the claim period by selecting the period that aligns with the date and time of the happening of the first recorded individual loss to the Company in that catastrophe. This ensures that each Loss Occurrence is based on the earliest loss recorded and avoids overlapping periods.
Q142.
What is the purpose of the index clause in the reinsurance agreement?

a.

To determine the priority of the Company and the maximum liability of the Reinsurer

b.

To adjust the monetary values based on the change in the Index

c.

To ascertain the time of payment for any claim

d.

To establish the proportionate increase or decrease in the priority and liability

Discuss
Answer: (b).To adjust the monetary values based on the change in the Index Explanation:The index clause in the reinsurance agreement serves the purpose of adjusting the monetary values based on the change in the Index. It ensures that the priority of the Company and the maximum liability of the Reinsurer retain their relative values as specified in the agreement, considering the fluctuations in the Index.
Q143.
Under what condition is the index clause not applied in the reinsurance agreement?

a.

When the Index remains unchanged from the date of commencement of the Agreement

b.

When the fluctuation of the Index is below 10%

c.

When the Reinsurer's liability exceeds the maximum limit specified in the Agreement

d.

When the Company and the Reinsurer cannot agree on the application of the clause

Discuss
Answer: (b).When the fluctuation of the Index is below 10% Explanation:The index clause in the reinsurance agreement is not applied when the fluctuation of the Index is below 10%. This means that if the Index shows minimal changes within the specified range, the adjustment of priorities and liabilities based on the Index is not activated.
Q144.
How is the time of payment of any claim determined in the reinsurance agreement?

a.

It is the actual date upon which payment is made by the Company

b.

It is the date of the Court's award if no appeal is made

c.

It is the date of the Appeal Court's award if the case goes to Appeal

d.

It is the date of the final payment to the claimant

Discuss
Answer: (d).It is the date of the final payment to the claimant Explanation:In the reinsurance agreement, the time of payment of any claim is deemed to be the date of the final payment to the claimant. This applies even if the loss settlement involves multiple payments. The index used at the time of the final payment determines the priority of the Company in respect of all payments to the claimant.
Q145.
What happens to the priority and liability in the index clause when the Index fluctuates by 10% or more?

a.

They are adjusted in proportion to the increase or decrease in the Index

b.

They remain unchanged regardless of the change in the Index

c.

They are reset to their initial values specified in the Schedule(s)

d.

They are determined based on the date of the Court's award

Discuss
Answer: (a).They are adjusted in proportion to the increase or decrease in the Index Explanation:When the Index fluctuates by 10% or more, the priority of the Company and the maximum liability of the Reinsurer are adjusted in proportion to the increase or decrease in the Index. This ensures that the relative values of priority and liability are maintained based on the changes in the Index since the commencement of the Agreement.
Q146.
What is the condition precedent to any liability to pay under the reinsurance contract?

a.

The lead Reinsurer's approval of the claim

b.

The Reinsured's immediate notification of the occurrence

c.

The appointment of a representative by the Reinsured

d.

The investigation of the occurrence by the Reinsured

Discuss
Answer: (b).The Reinsured's immediate notification of the occurrence Explanation:The condition precedent to any liability to pay under the reinsurance contract is the Reinsured's immediate notification of the occurrence upon becoming aware of it. This notification allows the lead Reinsurer to cooperate with the Reinsured in the claim adjustment or investigation process.
Q147.
What does the claims control clause in the policy state?What role does the lead Reinsurer have in the claims co-operation clause?

a.

The reinsurers have complete control of claim adjustmentTo investigate the occurrence independently

b.

The reinsurers are responsible for initiating legal proceedingsTo appoint a representative on behalf of the Reinsured

c.

The reinsurers follow the fortunes of the insurers in all circumstancesTo cooperate with the Reinsured in claim adjustment or investigation

d.

The reinsurers are bound by the insurers' decisions regarding claimsTo inform the insurers of any possible claim indemnifiable under the policy

Discuss
Answer: (b).The reinsurers have complete control of claim adjustmentTo cooperate with the Reinsured in claim adjustment or investigation Explanation:The claims control clause in the policy stipulates that the reinsurers have complete control of the adjustment of all claims indemnifiable under the policy. This means they have the authority to oversee and manage the claim settlement process.In the claims co-operation clause, the role of the lead Reinsurer is to cooperate with the Reinsured in the adjustment of the claim or in the investigation of the occurrence. They may also appoint a representative to handle these tasks on their behalf. This collaboration ensures smooth communication and effective claim resolution between the parties.
Q148.
What does the claims control clause in the policy state?

a.

The reinsurers have complete control of claim adjustment

b.

The reinsurers are responsible for initiating legal proceedings

c.

The reinsurers follow the fortunes of the insurers in all circumstances

d.

The reinsurers are bound by the insurers' decisions regarding claims

Discuss
Answer: (a).The reinsurers have complete control of claim adjustment Explanation:The claims control clause in the policy stipulates that the reinsurers have complete control of the adjustment of all claims indemnifiable under the policy. This means they have the authority to oversee and manage the claim settlement process.
Q149.
How do the reinsurers follow the fortunes of the insurers in the claims control clause?

a.

By taking over all legal proceedings related to the claims

b.

By considering themselves bound by local laws, precedents, and practices

c.

By assuming complete control of the claim adjustment process

d.

By indemnifying the insurers for all claim-related expenses

Discuss
Answer: (b).By considering themselves bound by local laws, precedents, and practices Explanation:In the claims control clause, the reinsurers agree to follow the fortunes of the insurers. This means that they consider themselves bound by local laws, precedents, and practices. They align their actions and decisions regarding the claims with the legal and regulatory framework of the relevant jurisdiction.
Q150.
Which of the following is excluded from coverage under the political risks exclusion clause?

a.

Losses caused by natural disasters

b.

Losses resulting from civil war

c.

Losses arising from accidents

d.

Losses due to economic recession

Discuss
Answer: (b).Losses resulting from civil war Explanation:The political risks exclusion clause excludes loss, damage, cost, or expense resulting from civil war. While other causes such as natural disasters, accidents, or economic recession may still be covered under other provisions in the reinsurance or endorsements.
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