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 9 of 19

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Q81.
What is the purpose of loss advices in a reinsurance agreement?

a.

To debit losses to the reinsurer in the accounts

b.

To request immediate settlement of losses by the reinsurer

c.

To notify the reinsurer when a loss reaches a certain amount

d.

To adjust, compromise, and settle claims by the ceding insurer

Discuss
Answer: (c).To notify the reinsurer when a loss reaches a certain amount Explanation:Loss advices include notifying the reinsurer when a loss reaches an agreed amount, even if the ceding insurer does not request special settlement.
Q82.
What is a 'cash loss request' in a reinsurance agreement?

a.

Debiting losses to the reinsurer in the accounts

b.

Requesting immediate settlement of losses by the reinsurer

c.

Advising outstanding losses at the anniversary date

d.

Sharing proportionately in recoveries

Discuss
Answer: (b).Requesting immediate settlement of losses by the reinsurer Explanation:If any individual loss exceeds an agreed sum, the ceding insurer may request for immediate settlement of loss by the reinsurer for their share. This is known as a 'cash loss request'.
Q83.
What is the purpose of the 'preliminary loss advice' in a reinsurance agreement?

a.

To debit losses to the reinsurer in the accounts

b.

To request immediate settlement of losses by the reinsurer

c.

To notify the reinsurer when a loss reaches a certain amount

d.

To advise outstanding losses at the anniversary date

Discuss
Answer: (c).To notify the reinsurer when a loss reaches a certain amount Explanation:The preliminary loss advice is given to the reinsurer when a loss reaches an agreed amount, even if the ceding insurer does not request special settlement.
Q84.
Who has the sole right to adjust, compromise, and settle claims in a reinsurance agreement?

a.

The ceding insurer

b.

The reinsurer

c.

The insured party

d.

The intermediary

Discuss
Answer: (a).The ceding insurer Explanation:The ceding insurer has the sole right to adjust, compromise, and settle claims, and the reinsurer follows the settlement.
Q85.
What expenses are the reinsurer liable for in a reinsurance agreement?

a.

Insurer's salaries and overheads

b.

Loss adjustment expenses

c.

Recovery expenses

d.

Claim settlement expenses

Discuss
Answer: (b).Loss adjustment expenses Explanation:The reinsurer is liable for their proportion of all loss adjustment expenses, excluding the insurer's salaries and overheads.
Q86.
Which of the following is designed to protect the ceding insurer against any inadvertent delays, errors or omissions?

a.

Operative clause

b.

Errors and Omissions

c.

Access to records

d.

Alterations

Discuss
Answer: (b).Errors and Omissions Explanation:The clause designed to protect the ceding insurer against any inadvertent delays, errors, or omissions is referred to as the "Errors and Omissions" clause.
Q87.
What does the "Business Covered: Attachment of cessions - proportional" clause deal with?

a.

Attachment of individual cessions

b.

Exclusions of war and nuclear risks

c.

Facultative reinsurance

d.

Accumulations of risk

Discuss
Answer: (a).Attachment of individual cessions Explanation:The "Business Covered: Attachment of cessions - proportional" clause deals with the attachment of individual cessions in respect of automatic forms of reinsurance such as a treaty.
Q88.
When does the reinsurance apply according to the "Business Covered: Attachment of cessions - proportional" clause?

a.

As soon as the retention of the ceding insurer is exceeded

b.

At the time of accepting a risk

c.

When the cession is entered in the reinsurance register

d.

When the liability of the ceding insurer under the original acceptance occurs

Discuss
Answer: (a).As soon as the retention of the ceding insurer is exceeded Explanation:The "Business Covered: Attachment of cessions - proportional" clause states that reinsurance will apply simultaneously and automatically with that of the ceding insurer as soon as his retention is exceeded with reference to surplus reinsurance.
Q89.
What is the purpose of the "Business Covered: Attachment of cessions - proportional" clause for quota share reinsurance?

a.

To restrict the business covered

b.

To define the exclusions of war and nuclear risks

c.

To ensure simultaneous and automatic cession

d.

To provide protection for terrorism and sabotage risks

Discuss
Answer: (c).To ensure simultaneous and automatic cession Explanation:For quota share reinsurance, the "Business Covered: Attachment of cessions - proportional" clause ensures that the cession would be simultaneous and automatic with the liability of the ceding insurer under his original acceptance.
Q90.
Which risks are typically excluded by reinsurers in relation to the "Business Covered: Attachment of cessions - proportional" clause?

a.

Risks of war in marine and personal accident classes

b.

Accumulations of risk from inward treaty reinsurances

c.

Obligatory reinsurances and retrocessions

d.

Terrorism and sabotage risks

Discuss
Answer: (d).Terrorism and sabotage risks Explanation:The exclusions to the "Business Covered: Attachment of cessions - proportional" clause typically include risks of war and nuclear risks except for risks of war in marine and personal accident classes. Terrorism and sabotage risks were also excluded following the terrorist attacks in September 2001.
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