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 3 of 19

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Q21.
Which principle is an integral part of the reinsurance contract?

a.

Principle of utmost good faith

b.

Principle of insurable interest

c.

Principle of indemnity

d.

Principle of disclosure

Discuss
Answer: (c).Principle of indemnity Explanation:The principle of indemnity is an integral part of the reinsurance contract, regardless of whether the original contract has a pure indemnity.
Q22.
In a reinsurance contract, who is entitled to an indemnity?

a.

The reinsurer

b.

The original insured

c.

The reinsured

d.

The original insurer

Discuss
Answer: (c).The reinsured Explanation:The principle of indemnity in a reinsurance contract gives the reinsured the right to an indemnity. It does not confer any rights on the original insured or other parties.
Q23.
What must the reinsured provide to the reinsurer in case of a dispute?

a.

Proof of loss

b.

Proof of payment

c.

Proof of insurable interest

d.

Proof of underwriting guidelines

Discuss
Answer: (a).Proof of loss Explanation:In case of a dispute, the reinsured is required to provide proof of loss to the reinsurer. This is necessary to demonstrate that the loss has actually occurred and falls under the terms of the reinsurance contract.
Q24.
When a reinsured goes into liquidation, what liability does the reinsurer have?

a.

Liability to pay the reinsured's debts

b.

Liability to pay the original insured's claim

c.

Liability to pay the reinsured's share of liability

d.

Liability to pay the liquidation expenses

Discuss
Answer: (c).Liability to pay the reinsured's share of liability Explanation:In cases where the reinsured goes into liquidation, once the insolvent insurer's liability to pay a claim has been established, the reinsurer is liable to pay its share of the liability as determined.
Q25.
What is the subject matter of the reinsurance contract?

a.

The reinsurer's liability

b.

The original insurer's liability

c.

The original insured's property

d.

The reinsured's liability in the original insurance

Discuss
Answer: (d).The reinsured's liability in the original insurance Explanation:The subject matter of the reinsurance contract is the reinsured's liability in the original insurance. The validity of the reinsurance contract is dependent on the existence of the subject matter of the insurance.
Q26.
What is the implication if there is no property matching the description in the original policy?

a.

The reinsurance policy becomes void.

b.

The reinsurer assumes the liability.

c.

The original insurer is responsible for the loss.

d.

The reinsured is exempt from liability.

Discuss
Answer: (a).The reinsurance policy becomes void. Explanation:If there is no property in existence that matches the description in the original policy, the policy does not attach, and any reinsurance made in respect thereof also fails.
Q27.
Why has reinsurance tended to escape legislators' attention in the past?

a.

Lack of understanding by the general public

b.

International scope and complexity

c.

Limited revenue potential

d.

Insufficient demand in the market

Discuss
Answer: (b).International scope and complexity Explanation:Reinsurance, being international in its scope and not easily comprehensible to the general commercial public, has tended to escape legislators' attention. The complexity of reinsurance contributes to this situation.
Q28.
In case of treaty reinsurance, what is the signing rule for a reinsurance contract?

a.

Policy has to be signed by ceding insurer

b.

Policy has to be signed by the reinsured

c.

Policy has to be signed by or on behalf of each party

d.

Policy has to be signed by insurance broker

Discuss
Answer: (c).Policy has to be signed by or on behalf of each party Explanation:In the case of treaty reinsurance, a treaty wording containing reciprocal undertakings is signed by or on behalf of each party to the contract. This means that both the ceding insurer (reinsured) and the reinsurer need to sign the policy or have it signed on their behalf.
Q29.
What are treaty wordings in reinsurance contracts?

a.

Agreements between the ceding insurer and the insured

b.

Agreements between the reinsurer and the insured

c.

Agreements between the ceding insurer and the reinsurer

d.

Agreements between the broker and the insured

Discuss
Answer: (c).Agreements between the ceding insurer and the reinsurer Explanation:Treaty wordings are reinsurance agreements entered into in writing between the ceding insurer (insured) and the reinsurer. They embody the terms and conditions of the treaty as agreed between these two parties.
Q30.
What do treaty wordings describe in reinsurance contracts?

a.

The scope of the cover granted by the insured

b.

The scope of the cover granted by the reinsurer

c.

The administrative aspects of the treaty

d.

The financial aspects of the treaty

Discuss
Answer: (c).The administrative aspects of the treaty Explanation:Treaty wordings not only describe the scope of the cover granted by the reinsurers but also cover the various administrative aspects of the treaty, such as accounting, portfolio movements, and bordereaux.
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