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 19 of 19

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Q181.
When a reinsurance agreement is received, it must be:

a.

Properly stamped and scrutinized by a responsible official.

b.

Signed in duplicate and returned to the ceding insurer.

c.

Forwarded to the Stamp Office for stamping.

d.

Attached to the slip as proof of acceptance.

Discuss
Answer: (a).Properly stamped and scrutinized by a responsible official. Explanation:Upon receiving a reinsurance agreement, it must undergo proper stamping and scrutiny by a responsible official to ensure compliance with applicable regulations and to identify any unacceptable conditions or absence of standard clauses.
Q182.
Which of the following clauses allows the reinsured to cancel the reinsurance contract and then seek a new reinsurer if the reinsurer is downgraded by the rating organizations?

a.

PML excess clause

b.

Downgrade clause

c.

Loss occurrence clause

d.

Original conditions clause

Discuss
Answer: (b).Downgrade clause Explanation:The downgrade clause allows the reinsured to cancel the reinsurance contract and seek a new reinsurer if the reinsurer is downgraded by the rating organizations. This clause provides the reinsured with the option to terminate the contract in the event of a downgrade in the reinsurer's financial strength or credit rating, ensuring the reinsured's protection and the ability to secure reinsurance coverage from a financially stable reinsurer.
Q183.
____________ is the amount of the ceding insurer`s loss which is eligible for recovery under the terms of an excess of loss treaty.

a.

Ground up loss

b.

Ultimate net loss

c.

Net retained loss

d.

Gross loss

Discuss
Answer: (b).Ultimate net loss Explanation:
Q184.
The ___________ clause allows the possibility of making amendments, consent of both the parties, addendum forming integral part of and binding on the parties.

a.

Access to records

b.

Alterations

c.

Errors and Ommissions

d.

Arbitration

Discuss
Answer: (b).Alterations Explanation:The "Alterations" clause allows for the possibility of making amendments to the reinsurance contract. It requires the consent of both parties involved, and any addendum or amendment becomes an integral part of the contract and is binding on both the reinsured and the reinsurer. This clause ensures that any changes or modifications to the original terms and conditions of the contract are properly documented and agreed upon by both parties.
Q185.
Which of the following clauses is commonly found in all agreements and describes without any ambiguity the business coming within the scope of a reinsurance contract?

a.

Operative clause

b.

Downgrade clause

c.

Commencement and Termination clause

d.

Sudden death clause

Discuss
Answer: (a).Operative clause Explanation:The "Operative clause" is commonly found in all reinsurance agreements and serves the purpose of describing, without any ambiguity, the business that falls within the scope of the reinsurance contract. It outlines the key terms and conditions of the contract, including the specific risks, coverages, and liabilities that are being reinsured. The operative clause is essential in clearly defining the scope and intent of the reinsurance agreement and ensuring that both parties have a mutual understanding of the business being reinsured.
Q186.
With the __________________ clause, the ceding insurer can make a provision for ‘termination without notice’ in the event of certain other circumstances stipulated in the contract.

a.

Operative clause

b.

Downgrade clause

c.

Commencement and Termination clause

d.

Sudden death clause

Discuss
Answer: (d).Sudden death clause Explanation:The Sudden death clause in a reinsurance contract allows the ceding insurer to include a provision for "termination without notice" in the event of certain specified circumstances mentioned in the contract. This clause provides the ceding insurer with the ability to terminate the reinsurance agreement abruptly and without prior notice if specific triggering events occur. These events are typically severe and unexpected, such as the insolvency of the reinsurer, a catastrophic event, or any other circumstances that significantly impact the stability or viability of the reinsurance arrangement. The Sudden death clause offers a safeguard for the ceding insurer to quickly terminate the contract in situations where continuing the agreement would be deemed impractical or detrimental.
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