Methods of Reinsurance II MCQs

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

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Methods of Reinsurance II MCQs | Page 10 of 10

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Q91.
In case of Excess of Loss – Working (per risk), insurance protection is sought by the ceding reinsurer for ___________.

a.

Mitigating Risk

b.

Mitigating Excess of loss

c.

Mitigating Proportional premium

d.

Mitigating loss beyond its limit of retention

Discuss
Answer: (d).Mitigating loss beyond its limit of retention Explanation:In excess of loss - working (per risk), the ceding reinsurer seeks insurance protection to mitigate losses that exceed its limit of retention for each individual risk. This means that the reinsurer will only pay out for losses that exceed a certain threshold, which is set by the reinsurer's retention limit for each individual risk. The excess of loss cover is designed to protect the ceding reinsurer from large losses that it would otherwise be unable to absorb on its own.
Q92.
Which of the following covers is sought for protection against an aggregation of losses arising from a common event such as flood?

a.

Excess of loss- Working (per risk)

b.

Excess of loss- Catastrophe

c.

Stop loss

d.

Aggregate excess of loss

Discuss
Answer: (b).Excess of loss- Catastrophe Explanation:In excess of loss - Catastrophe cover protects a reinsured against an aggregation of losses arising from a common event such as: earthquake, flood, cyclone, riots, etc.
Q93.
________________ is a method that mitigates the impact of an unbearable net loss ratio.

a.

Excess of loss- Working (per risk)

b.

Excess of loss-catastrophe

c.

Stop loss

d.

Aggregate excess of loss

Discuss
Answer: (c).Stop loss Explanation:The stop loss method is used to mitigate the impact of an unbearable net loss ratio for the reinsured for any one class of business. This means that if the loss ratio exceeds a certain level, the reinsurer will pay the excess amount. This method is not based on per risk or catastrophe, but on the overall loss ratio of the reinsured.
Q94.
Which of the following covers is installed to assist to cover any gap in the various reinsurance arrangements made by a reinsured?

a.

Excess of loss –catastrophe

b.

Stop loss

c.

Whole account excess of loss cover

d.

Umbrella excess of loss cover

Discuss
Answer: (d).Umbrella excess of loss cover Explanation:Umbrella excess of loss cover is installed to cover any gaps or deficiencies in the various reinsurance arrangements made by the reinsured. It acts as a supplement to other types of reinsurance, providing additional coverage where needed. This type of cover is often used to fill in coverage gaps that may exist in a company's overall reinsurance program.
Q95.
________________ are also known as Working Excess of Loss covers and are used to reduce the insurer’s loss in respect of a single risk.

a.

Ultimate net loss

b.

Per risk

c.

Catastrophe

d.

Burning cost

Discuss
Answer: (b).Per risk Explanation:Per risk excess of loss is a type of non-proportional reinsurance cover that protects an insurer against large losses on an individual risk. It is also known as working excess of loss covers. The reinsurer agrees to pay a percentage of the loss above a specified amount, which is called the retention or deductible. The purpose of this cover is to limit the insurer's loss on a single risk and to protect its solvency.
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