Methods of Reinsurance I MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Methods of Reinsurance I, 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 Methods of Reinsurance I 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 Methods of Reinsurance I mcq questions that explore various aspects of Methods of Reinsurance I problems. Each MCQ is crafted to challenge your understanding of Methods of Reinsurance I 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 Methods of Reinsurance I MCQs are your pathway to success in mastering this essential IC85 Reinsurance Management topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Methods of Reinsurance I. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Methods of Reinsurance I knowledge to the test? Let's get started with our carefully curated MCQs!

Methods of Reinsurance I MCQs | Page 5 of 10

Discover more Topics under IC85 Reinsurance Management

Q41.
What is loss-occurring basis?

a.

A basis under which reinsurance is provided for all claims from the ceding insurer`s underlying policies incepting during the period of the reinsurance contract

b.

A basis under which all claims occurring during the period of the treaty, irrespective of when the underlying policies incepted, are covered

c.

A basis under which the reinsurer only covers specific types of risks

d.

A basis under which the reinsurer only covers risks in a specific geographic area

Discuss
Answer: (b).A basis under which all claims occurring during the period of the treaty, irrespective of when the underlying policies incepted, are covered Explanation:A loss-occurring basis can be described as a basis under which all claims occurring during the period of the treaty, irrespective of when the underlying policies incepted, are covered.
Q42.
What is the purpose of the treaty arrangement between ceding insurer and reinsurer?

a.

To cover all risks within the scope of the treaty

b.

To cover surplus only from specified risks within the scope of the treaty

c.

To provide primary insurance coverage to the insured

d.

To provide excess insurance coverage to the insured

Discuss
Answer: (b).To cover surplus only from specified risks within the scope of the treaty Explanation:The treaty arrangement between ceding insurer and reinsurer is designed to cover surplus only from specified risks within the scope of the treaty.
Q43.
What is included in the treaty as a document of agreement?

a.

A list of all classes of business transacted by the ceding insurer

b.

A list of classes of business covered by the treaty

c.

A list of all claims covered by the treaty

d.

A list of all claims not covered by the treaty

Discuss
Answer: (b).A list of classes of business covered by the treaty Explanation:The treaty as a document of agreement will contain a description or list of classes of business covered, such as burglary insurances or contractors all risks.
Q44.
What are exclusions in a reinsurance treaty?

a.

A list of risks covered by the treaty

b.

A list of risks excluded from the treaty

c.

A list of risks that can be added to the treaty

d.

None of the above

Discuss
Answer: (b).A list of risks excluded from the treaty Explanation:Exclusions in a reinsurance treaty refer to a list of risks that the reinsurer will not accept from the ceding insurer.
Q45.
Why might a reinsurer exclude certain risks from a treaty?

a.

To protect the treaty result in their own interest

b.

To prevent the ceding insurer from writing risks in which they are not experienced

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:A reinsurer may exclude risks or define the cover more clearly targeting to protect the treaty result in his own interest and thus prevent the ceding insurer from writing risks in which he is not experienced.
Q46.
Why might a reinsurer exclude certain risks from a treaty?What is a bordereaux?

a.

To protect the treaty result in their own interestA list detailing the risks ceded to the treaty

b.

To prevent the ceding insurer from writing risks in which they are not experiencedA list of risks excluded from the treaty

c.

Both a and bA list of risks that can be added to the treaty

d.

None of the aboveNone of the above

Discuss
Answer: (b).Both a and bA list detailing the risks ceded to the treaty Explanation:A reinsurer may exclude risks or define the cover more clearly targeting to protect the treaty result in his own interest and thus prevent the ceding insurer from writing risks in which he is not experienced.A bordereaux is a list provided by the ceding insurer to the reinsurer, detailing the risks ceded to the treaty.
Q47.
What information is typically included in a bordereaux?

a.

Name of insured, class of risk, sum insured, premium rate, ceding insurer’s retention, amount reinsured, and period of insurance

b.

Name of reinsured, class of risk, sum insured, premium rate, ceding insurer’s retention, amount reinsured, and period of insurance

c.

Name of insured, class of risk, sum insured, premium rate, reinsurer’s retention, amount reinsured, and period of insurance

d.

None of the above

Discuss
Answer: (a).Name of insured, class of risk, sum insured, premium rate, ceding insurer’s retention, amount reinsured, and period of insurance Explanation:A bordereaux typically includes the name of insured, class of risk, sum insured, premium rate, ceding insurer’s retention, amount reinsured, and period of insurance.
Q48.
How often is a bordereaux typically submitted to the reinsurer?

a.

Annually

b.

Monthly or quarterly

c.

Every six months

d.

It varies depending on the treaty

Discuss
Answer: (b).Monthly or quarterly Explanation:A bordereaux is typically submitted monthly or quarterly as agreed between the parties.
Q49.
Why might a reinsurer insist on a bordereaux for a newly established ceding insurer?

a.

To monitor the ceding insurer's use of the treaty

b.

To increase administrative efficiency

c.

To discourage the ceding insurer from writing certain types of risks

d.

None of the above

Discuss
Answer: (a).To monitor the ceding insurer's use of the treaty Explanation:Reinsurers tend to insist on bordereaux only if the treaty is with a newly established ceding insurer to enable the reinsurer to monitor the ceding insurer's use of the treaty.
Q50.
In what cases might a reinsurer need to effect reinsurance in respect of their acceptance?

a.

Specialized classes of insurance with a risk of accumulation

b.

When the surplus ceded is so large that the reinsurer himself may need to effect reinsurance in respect of his acceptance

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:In cases where there is a risk of accumulation in specialized classes of insurance, or when the surplus ceded is so large that the reinsurer may need to effect reinsurance in respect of their acceptance, the reinsurer expects detailed advice to enable them to manage their own risk exposure. This suggests that both of these conditions could lead a reinsurer to need to effect reinsurance in respect of their acceptance.
Page 5 of 10