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 5 of 19

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Q41.
What does the operative clause of a reinsurance contract emphasize?

a.

The discretion of the reinsurer to accept or decline risks

b.

The insurer's obligation to cede the risk and the reinsurer's obligation to accept it

c.

The territorial scope of the reinsurance contract

d.

The maximum liability of the reinsurer in terms of net retention

Discuss
Answer: (b).The insurer's obligation to cede the risk and the reinsurer's obligation to accept it Explanation:The operative clause brings out the obligatory nature of reinsuring, in that the insurer binds himself to cede and the reinsurer binds himself to accept.
Q42.
What is mentioned in the operative clause regarding the method of cession?What does the territorial scope in the operative clause refer to?

a.

The reinsurer's method of accepting the cessionThe geographical area covered by the reinsurer

b.

The insurer's method of calculating the cessionThe geographical area covered by the insurer

c.

The reinsurer's method of calculating the cessionThe geographical area covered by retrocessions

d.

The insurer's method of accepting the cessionThe geographical area covered by direct insurances

Discuss
Answer: (b).The reinsurer's method of calculating the cessionThe geographical area covered by direct insurances Explanation:The operative clause states the method of cession, which would be the reinsurer's method of calculating the cession.The territorial scope is stated in the operative clause and it would usually include direct insurances.
Q43.
What is mentioned in the operative clause regarding the method of cession?

a.

The reinsurer's method of accepting the cession

b.

The insurer's method of calculating the cession

c.

The reinsurer's method of calculating the cession

d.

The insurer's method of accepting the cession

Discuss
Answer: (c).The reinsurer's method of calculating the cession Explanation:The operative clause states the method of cession, which would be the reinsurer's method of calculating the cession.
Q44.
What does the insurer have the authority to determine in the operative clause?

a.

The maximum liability of the reinsurer

b.

The net retention of the reinsurer

c.

The territorial scope of the reinsurance contract

d.

The method of cession in the reinsurance contract

Discuss
Answer: (b).The net retention of the reinsurer Explanation:The insurer is the sole judge of what constitutes his own risk and determines his retention accordingly.
Q45.
When does a reinsurance agreement typically commence?

a.

On the date agreed between the parties

b.

On the 1st of January

c.

On the termination date of the previous agreement

d.

On the anniversary of the original insurance policy

Discuss
Answer: (a).On the date agreed between the parties Explanation:The agreement will incept on the date as agreed between the parties.
Q46.
How long does an annual reinsurance contract typically last?

a.

30 days

b.

60 days

c.

90 days

d.

365 days

Discuss
Answer: (d).365 days Explanation:The agreement may terminate at 31st December if it is an annual contract. Therefore, an annual contract typically lasts for 365 days.
Q47.
What is required to terminate a reinsurance agreement?

a.

Notice of cancellation by either party

b.

Written agreement between the parties

c.

Approval from the regulatory authority

d.

The expiration of the natural term of the agreement

Discuss
Answer: (a).Notice of cancellation by either party Explanation:Either party shall be at liberty to terminate the agreement by giving not less than 90 days' notice in writing.
Q48.
Under what circumstances can a reinsurance agreement be automatically terminated?

a.

Failure to pay premiums

b.

War between the parties' countries of residence

c.

Change in regulatory requirements

d.

Insolvency of the reinsurer

Discuss
Answer: (b).War between the parties' countries of residence Explanation:If war arises between India and the country in which the reinsurers reside or carry on business or are incorporated, the agreement shall be automatically terminated forthwith.
Q49.
In what situation can the insurer terminate the agreement without notice?

a.

In case of insolvency of the reinsurer

b.

If the reinsurer fails to provide required reports

c.

If postal and telegraphic communications are disrupted due to war

d.

If there is a change in the reinsurer's ownership

Discuss
Answer: (c).If postal and telegraphic communications are disrupted due to war Explanation:If postal and/or telegraphic communications are rendered impossible for a period exceeding thirty (30) days as a consequence of war or other similar events, the insurer is entitled to terminate the agreement forthwith without giving notice.
Q50.
Under what circumstances can either party terminate the agreement immediately?

a.

If the reinsurer fails to pay premiums

b.

If the reinsured becomes insolvent

c.

If there is a change in ownership of the reinsurer

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Either party can terminate the agreement immediately under various circumstances, including if the performance of the agreement is prohibited or rendered impossible by law, if the other party becomes insolvent, if there is a material change in ownership or control of the other party, or if the other party's country or territory is involved in armed hostilities.
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