Processing Information for Reinsurance Decisions MCQs

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

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Processing Information for Reinsurance Decisions MCQs | Page 4 of 7

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Q31.
How can underwriters determine the zones that may be affected by earthquake damage?

a.

By referring to seismic maps

b.

By analyzing historical earthquake data

c.

By consulting with local authorities

d.

By conducting on-site inspections

Discuss
Answer: (a).By referring to seismic maps Explanation:Underwriters can determine the zones that may be affected by earthquake damage by referring to seismic maps. Seismic maps provide valuable information about the seismic activity and potential risks in different areas. By studying these maps, underwriters can identify the zones that require special attention in terms of underwriting and risk management.
Q32.
What is the purpose of maintaining accumulation control sheets?

a.

To assess the total liabilities in each zone

b.

To track changes in liabilities under various acceptances

c.

To arrange suitable catastrophe protection for existing commitments

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The purpose of maintaining accumulation control sheets is to assess the total liabilities in each zone, track changes in liabilities under various acceptances, and arrange suitable catastrophe protection for existing commitments. These sheets provide an overview of the underwriter's liabilities, allowing for better control and management of risks associated with catastrophic perils.
Q33.
Which regions are prone to volcanic eruptions?

a.

Japan, Indonesia, Philippines

b.

Italy, New Zealand, Caribbean

c.

South America, Australia, Fiji

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Regions prone to volcanic eruptions include Japan, Indonesia, Philippines, Italy, New Zealand, Caribbean, South America, Australia, and Fiji. These regions experience volcanic activity and are susceptible to associated risks. Underwriters need to consider these risks when assessing and managing reinsurance commitments.
Q34.
What are some of the uses of the information produced from a statistical base in insurance and reinsurance?

a.

Production of accounts

b.

Production of marketing information

c.

Assessment of outstanding claims and IBNR reserves

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The information produced from a statistical base in insurance and reinsurance has multiple uses. It is used for the production of accounts, marketing information, and rating information. It is also utilized for assessing outstanding claims and Incurred But Not Reported (IBNR) reserves, as well as for financial planning purposes. These uses demonstrate the importance of a robust statistical system in supporting various aspects of insurance and reinsurance operations.
Q35.
What is the purpose of reconciling balances and reviewing cash flow in the context of evolving a statistical system?

a.

To assess profitability of outgoing treaties

b.

To analyze the portfolio underwritten and ascertain exposures

c.

To determine the aggregate loss amount due to a catastrophic event

d.

To obtain marketing information for outgoing treaties

Discuss
Answer: (b).To analyze the portfolio underwritten and ascertain exposures Explanation:Reconciling balances and reviewing cash flow in the context of evolving a statistical system serves the purpose of option b. It helps in analyzing the portfolio underwritten and ascertaining the exposures associated with the business. This step provides valuable insights into the financial performance and risks of the reinsurance operations.
Q36.
What type of information is required for retrocession treaties in the context of evolving a statistical system?

a.

Statistical and accounting requirements

b.

Large claims information

c.

Marketing information for outgoing treaties

d.

Aggregate loss amount due to a catastrophic event

Discuss
Answer: (a).Statistical and accounting requirements Explanation:Retrocession treaties in the context of evolving a statistical system require statistical and accounting requirements, as indicated by option a). Retrocession involves transferring a portion of the reinsurance risk to another reinsurer, and thus, specific statistical and accounting information is necessary to manage and analyze these treaty arrangements.
Q37.
In the case of _________________, all business exchanged with the insurer or reinsurer is summarised in a sheet, showing cessions on one side and matching acceptances on the other side.

a.

Reinsurance arrangement

b.

Reciprocal exchange

c.

Retrocession arrangement

d.

Cancellation of reinsurance agreement

Discuss
Answer: (b).Reciprocal exchange Explanation:In the case of a reciprocal exchange, all business exchanged with the insurer or reinsurer is summarized in a sheet. This means that both cessions (risks transferred to the reinsurer) and matching acceptances (risks accepted by the reinsurer) are recorded on the sheet. A reciprocal exchange refers to a reinsurance arrangement where two parties agree to exchange risks with each other. They both act as both a reinsurer and a ceding insurer, depending on the specific risks involved. This arrangement allows for a balanced and mutually beneficial exchange of risks between the parties involved.
Q38.
What approach should underwriters take to accumulations arising from catastrophic perils?

a.

Maintain exhaustive control on each peril

b.

Modify the underwriting policy based on the dangers involved

c.

Ignore accumulations and focus on individual risks

d.

Seek external assistance to manage accumulations

Discuss
Answer: (b).Modify the underwriting policy based on the dangers involved Explanation:Underwriters should modify their underwriting policy based on the dangers involved in accumulations arising from catastrophic perils. While maintaining exhaustive control on each peril may not be practicable, underwriters need to be aware of the risks associated with accumulations and adjust their underwriting approach accordingly. This ensures appropriate risk management and mitigation strategies are in place.
Q39.
With the wider use of computers and telecommunications, there is a growing preference for simplified administration procedures in the reinsurance industry. This has led to:

a.

Increased paperwork for reinsurers and brokers

b.

Decreased administrative effort for insurers

c.

Higher reinsurance costs for insurers

d.

Slower communication between insurers and reinsurers

Discuss
Answer: (b).Decreased administrative effort for insurers Explanation:The use of computers and telecommunications allows insurers to produce reinsurance accounts themselves, resulting in a minimum cost and saving administrative effort for reinsurers and brokers.
Q40.
Electronic data processing (EDP) techniques in reinsurance have gained acceptance:

a.

Only in a few countries

b.

Only in the first generation environment

c.

Only in offices with on-line systems

d.

All over the world

Discuss
Answer: (d).All over the world Explanation:The application of electronic data processing methods in reinsurance business is advanced and gained acceptance in countries all over the world.
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