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 17 of 19

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Q161.
Who has the burden of proving the coverage for losses excluded under the terrorism exclusion clause?

a.

The reinsured party

b.

The reinsurer

c.

The authorized governmental officials

d.

The court of law

Discuss
Answer: (a).The reinsured party Explanation:According to the terrorism exclusion clause, if the reinsurer alleges that any loss, damage, cost, or expense is not covered due to the exclusion, the burden of proving the contrary lies upon the reinsured party. The reinsured party must provide evidence to demonstrate that the loss falls within the coverage of the reinsurance agreement despite the terrorism exclusion.
Q162.
Which of the following activities would NOT be considered a "Terrorist Activity"?

a.

A bombing targeting a government building to influence its policies.

b.

An act of violence committed for personal reasons unrelated to any political, social, or religious cause.

c.

Disrupting public transportation to intimidate the general public.

d.

Using force to promote an ethnic cause.

Discuss
Answer: (b).An act of violence committed for personal reasons unrelated to any political, social, or religious cause. Explanation:An Activity can be considered "Terrorist Activity" unless it can be conclusively demonstrated to be motivated solely by personal objectives unrelated to any political, ideological, philosophical, racial, ethnic, social, or religious cause. Therefore, an act of violence committed for personal reasons unrelated to any such cause would not be considered a "Terrorist Activity."
Q163.
What is the condition under which an activity would NOT be considered a "Terrorist Activity"?

a.

If it is motivated solely by personal objectives of the perpetrator.

b.

If it involves disruption of a national economy.

c.

If it is carried out by an organization affiliated with the perpetrator.

d.

If it influences government-related operations.

Discuss
Answer: (a).If it is motivated solely by personal objectives of the perpetrator. Explanation:An activity would not be considered a "Terrorist Activity" if it can be conclusively demonstrated that the activity or threat thereof was motivated solely by personal objectives of the perpetrator. In such cases, the activity would be unrelated, in whole or in part, to any intention to promote or further political, ideological, philosophical, racial, ethnic, social, or religious causes.
Q164.
The ___________ clause states that premium is to be paid to the reinsurer at the same rate as received by the ceding insurer.What is the purpose of preparing a slip in the reinsurance placement process?

a.

Original conditionsTo evidence eventual acceptance of a share of the risk

b.

UnderwritingTo provide information on the placement, protection, and terms of cover

c.

Net retained linesTo summarize the essential conditions of the contract

d.

Ultimate net lossTo confirm the various points agreed upon by the ceding insurer and reinsurer

Discuss
Answer: (a).Original conditionsTo evidence eventual acceptance of a share of the risk Explanation:"Original conditions" clause typically ensures that the premium paid to the reinsurer is at the same rate as received by the ceding insurer, maintaining consistency in the payment terms between the two parties. The other options, such as "Underwriting," "Net retained lines," and "Ultimate net loss," do not directly relate to the specific clause described in the question.The preparation of a slip serves the purpose of evidencing eventual acceptance of a share of the risk or treaty ceded by signing underwriters.
Q165.
The ___________ clause states that premium is to be paid to the reinsurer at the same rate as received by the ceding insurer.

a.

Original conditions

b.

Underwriting

c.

Net retained lines

d.

Ultimate net loss

Discuss
Answer: (a).Original conditions Explanation:"Original conditions" clause typically ensures that the premium paid to the reinsurer is at the same rate as received by the ceding insurer, maintaining consistency in the payment terms between the two parties. The other options, such as "Underwriting," "Net retained lines," and "Ultimate net loss," do not directly relate to the specific clause described in the question.
Q166.
Which document follows the slip to evidence the placement, protection, and terms of cover in reinsurance?

a.

Slip

b.

Treaty wordings

c.

Cover note

d.

Addenda

Discuss
Answer: (c).Cover note Explanation:The slip is followed by a broker's cover note, which provides evidence of the placement, protection, and terms of cover.
Q167.
How are the essential conditions of a reinsurance contract usually summarized?

a.

In the slip

b.

In the treaty wordings

c.

In the addenda

d.

In the cover note

Discuss
Answer: (b).In the treaty wordings Explanation:It is usual practice to summarize the essential conditions of the contract in a treaty slip, which is prepared after the treaty has come into effect.
Q168.
Which approach is used in constructing treaty wordings for reinsurance contracts?

a.

Splitting the wordings into two parts with a schedule attached

b.

Including all the terms and conditions in the body of the agreement

c.

Adding consecutively numbered addenda for amendments

d.

Narrating the various articles in the cover note

Discuss
Answer: (a).Splitting the wordings into two parts with a schedule attached Explanation:In the second approach, the treaty wordings are split into two parts. The body of the contract contains a narration of the various articles, while the specific terms are set forth in a schedule attached to the wordings.
Q169.
What is the purpose of a treaty slip in reinsurance?

a.

To provide evidence of the placement, protection, and terms of cover

b.

To summarize the essential conditions of the contract

c.

To confirm the various points agreed upon by the ceding insurer and reinsurer

d.

To provide information on the limits, number of lines, and cash loss limit

Discuss
Answer: (c).To confirm the various points agreed upon by the ceding insurer and reinsurer Explanation:The treaty slip serves the purpose of confirming the various points agreed to by the ceding insurer and reinsurer.
Q170.
How are amendments usually made to a reinsurance treaty?

a.

Through the slip

b.

Through the cover note

c.

Through the treaty wordings

d.

Through consecutively numbered addenda

Discuss
Answer: (d).Through consecutively numbered addenda Explanation:Amendments to the treaty are usually carried out using consecutively numbered addenda.
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