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.

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Law and Clauses Relating to Reinsurance Contracts MCQs | Page 18 of 19

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Q171.
What is the purpose of proper treaty documentation in reinsurance?

a.

To ensure clear and unambiguous terms and conditions

b.

To control the receipt of agreements and addenda

c.

To avoid problems in contract administration

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Proper treaty documentation in reinsurance is important to ensure clear and unambiguous terms and conditions, control the receipt of agreements and addenda, and avoid problems in contract administration.
Q172.
What should be done if there are unacceptable conditions or absence of standard clauses in the reinsurance agreement?

a.

It should be signed without any changes

b.

It should be returned to the reinsurer or ceding insurer for revision

c.

It should be stamped immediately

d.

It should be forwarded to the Stamp Office for scrutiny

Discuss
Answer: (b).It should be returned to the reinsurer or ceding insurer for revision Explanation:If there are unacceptable conditions or absence of standard clauses in the reinsurance agreement, it should be taken up with the reinsurer or ceding insurer for necessary changes.
Q173.
What is the requirement for stamping a treaty reinsurance agreement executed in India?

a.

It is optional to stamp the agreement

b.

It is mandatory to stamp the agreement

c.

The stamping requirement depends on the type of reinsurance agreement

d.

The stamping requirement is determined by the Indian Stamps Act 1899

Discuss
Answer: (b).It is mandatory to stamp the agreement Explanation:According to the Indian Stamps Act 1899, it is obligatory to stamp a treaty reinsurance agreement executed in India.
Q174.
How is the stamping of inward treaty agreements in India typically done?

a.

Both copies of the agreement are stamped before execution

b.

Only the copy retained by the Indian reinsurer is stamped

c.

The stamping is done by the ceding insurer

d.

The stamping is done by the Stamp Office before sending the agreement

Discuss
Answer: (b).Only the copy retained by the Indian reinsurer is stamped Explanation:In the case of inward treaty agreements received in duplicate, only the copy to be retained by the Indian reinsurer is stamped. The stamped copy is retained in the reinsurer's records, while the unstamped copy is returned to the ceding insurer.
Q175.
What is the procedure followed for stamping outward treaties in India?

a.

The stamping is done by the ceding insurer

b.

Both copies of the agreement are stamped before execution

c.

The stamping is done by the Stamp Office before sending the agreement

d.

The stamping is not required for outward treaties

Discuss
Answer: (c).The stamping is done by the Stamp Office before sending the agreement Explanation:A similar procedure is followed for stamping outward treaties, and the copy to be retained in India is stamped with a special adhesive stamp for the required amount by the Stamp Office before sending the agreement.
Q176.
The ____________ serve the purpose of evidencing eventual acceptance of a share of the risk / treaty ceded by signing underwriters.

a.

Slips

b.

Cover notes

c.

Reinsurance contracts

d.

Treaty wordings

Discuss
Answer: (a).Slips Explanation:The slips serve the purpose of evidencing eventual acceptance of a share of the risk / treaty ceded by signing underwriters. The slip is the first step in the reinsurance placement process and is prepared in consultation with a broker. It serves as a document to indicate the acceptance of a portion of the risk by underwriters.
Q177.
The parties to the reinsurance contract are:

a.

The reinsured and reinsurer.

b.

The ceding insurer and the insured.

c.

The underwriter and the broker.

d.

The policyholder and the reinsurer.

Discuss
Answer: (a).The reinsured and reinsurer. Explanation:The reinsurance contract involves the reinsured (the original insurer) and the reinsurer (the entity providing reinsurance coverage).
Q178.
The consideration for the reinsurance contract is:

a.

Reinsurance premium paid by the reinsured to the reinsurer.

b.

Insurance premium paid by the policyholder to the insurer.

c.

Claims paid by the reinsurer to the reinsured.

d.

Commission received by the broker from the reinsurer.

Discuss
Answer: (a).Reinsurance premium paid by the reinsured to the reinsurer. Explanation:The reinsurance contract involves the payment of a reinsurance premium from the reinsured to the reinsurer in exchange for assuming a share of the risk.
Q179.
What do treaty wordings refer to in the context of reinsurance agreements?

a.

Reinsurance agreements entered into in writing between the ceding insurer and the reinsurer.

b.

Terms and conditions specific to each class and type of contract.

c.

General conditions applicable to all classes of insurance business.

d.

Reciprocal undertakings signed by or on behalf of each party to a facultative reinsurance.

Discuss
Answer: (a).Reinsurance agreements entered into in writing between the ceding insurer and the reinsurer. Explanation:Treaty wordings are the written agreements between the ceding insurer and the reinsurer, which outline the terms and conditions of the reinsurance treaty.
Q180.
The importance of proper treaty documentation is emphasized because:

a.

It ensures clear and unambiguous communication between the parties.

b.

It simplifies the preparation of treaty wordings.

c.

It helps in the administration of the reinsurance contract.

d.

It determines the validity of the reinsurance.

Discuss
Answer: (a).It ensures clear and unambiguous communication between the parties. Explanation:Proper treaty documentation is crucial to avoid any problems in the administration of the reinsurance contract. It sets out the terms and conditions in a clear and unambiguous manner, ensuring effective communication between the parties involved.
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