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 6 of 19

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Q51.
Where should notices of termination be addressed?

a.

To the party's head office

b.

To the party's designated address

c.

To the regulatory authority

d.

To the party's legal representative

Discuss
Answer: (a).To the party's head office Explanation:Notices of termination should be addressed to the party concerned at its head office or at any address previously designated by that party.
Q52.
Under what circumstances can the insurer make the termination effective retroactively?

a.

If the termination is due to non-payment of premiums

b.

If the termination is due to the reinsured's insolvency

c.

If the termination is due to a material change in ownership

d.

If the termination is not the result of the prescribed 90 days' notice

Discuss
Answer: (d).If the termination is not the result of the prescribed 90 days' notice Explanation:If the agreement is terminated by any cause other than the prescribed 90 days' notice, the insurer has the option to make the date of termination effective retroactively from the last day of the previous quarter or 31st December of either the current or previous year.
Q53.
What is the purpose of the "notice of cancellation at anniversary date" provision?

a.

To allow the reinsurer to review the treaty acceptances

b.

To provide flexibility in the termination process

c.

To ensure timely renewal of existing cessions

d.

To address potential cancellation in facultative acceptances

Discuss
Answer: (a).To allow the reinsurer to review the treaty acceptances Explanation:Some reinsurers include a provision for "notice of cancellation at anniversary date" (NCAD) in their acceptances. This provision allows the reinsurer to review the treaty acceptances without having to observe the notice period mentioned in the agreement.
Q54.
When does the provision of "notice of cancellation at anniversary date" typically apply?

a.

Only in case of non-payment of premiums

b.

Only in facultative acceptances

c.

Only in annual reinsurance agreements

d.

In both facultative acceptances and agreements with periods extending beyond one year

Discuss
Answer: (d).In both facultative acceptances and agreements with periods extending beyond one year Explanation:The provision of "notice of cancellation at anniversary date" is also used in facultative acceptances with periods extending beyond one year.
Q55.
What does the reinsurer continue to do during the term of notice of cancellation?

a.

Accept new cessions and renew existing cessions

b.

Suspend all reinsurance activities

c.

Reject new cessions and cancel existing cessions

d.

Seek alternative reinsurers

Discuss
Answer: (a).Accept new cessions and renew existing cessions Explanation:During the term of notice of cancellation, the reinsurers shall continue to accept new cessions and renew existing cessions as if no such notice has been given.
Q56.
What is the purpose of sending a "Provisional Notice of Cancellation" (PNC) by reinsurers?

a.

To terminate the contract immediately

b.

To review the arrangement and decide on continuation

c.

To fulfill legal requirements for cancellation

d.

To provide an opportunity for renegotiation

Discuss
Answer: (b).To review the arrangement and decide on continuation Explanation:The purpose of sending a "Provisional Notice of Cancellation" (PNC) is to give notice of termination and, at the same time, make it "provisional" to enable the reinsurer to review the arrangement and decide whether to continue the contract for the ensuing year.
Q57.
What action should a reinsurer take if they decide to continue the contract after sending a provisional notice of cancellation?

a.

Send a definite notice of cancellation

b.

Withdraw the provisional notice of cancellation

c.

Request a renegotiation of the contract

d.

Continue the contract without any further action

Discuss
Answer: (b).Withdraw the provisional notice of cancellation Explanation:If the reinsurer decides to continue the contract, the provisional notice of cancellation will be withdrawn.
Q58.
Under what circumstances can a reinsurance agreement be automatically terminated?

a.

If the reinsurer fails to observe the terms of the agreement

b.

If the ceding insurer becomes insolvent

c.

If a war occurs between the countries of the ceding insurer and the reinsurer

d.

If the contract period expires without renewal

Discuss
Answer: (c).If a war occurs between the countries of the ceding insurer and the reinsurer Explanation:In the case of a war between the country of residence of the ceding insurer and the country in which the reinsurer resides or carries on business, the agreement will be automatically terminated.
Q59.
What is the purpose of a "Sudden Death Clause" in a reinsurance contract?

a.

To provide a notice period for termination

b.

To allow renegotiation of the contract terms

c.

To terminate the contract in case of insolvency or failure to observe the terms

d.

To facilitate the disposal of liability in case of termination

Discuss
Answer: (c).To terminate the contract in case of insolvency or failure to observe the terms Explanation:A "Sudden Death Clause" in a reinsurance contract allows for termination without notice in certain circumstances, such as insolvency of one of the parties or failure to observe the terms of the agreement.
Q60.
Under what circumstances can the reinsurance agreement be altered?

a.

By mutual consent of the parties

b.

Automatically at the end of the contract period

c.

If there is a dispute between the parties

d.

In case of insolvency of the ceding insurer

Discuss
Answer: (a).By mutual consent of the parties Explanation:The reinsurance agreement may be altered at any time by mutual consent of the parties through an addendum.
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