Reinsurance Accounting MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Reinsurance Accounting, 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 Reinsurance Accounting 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 Reinsurance Accounting mcq questions that explore various aspects of Reinsurance Accounting problems. Each MCQ is crafted to challenge your understanding of Reinsurance Accounting 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 Reinsurance Accounting 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 Reinsurance Accounting. 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 Reinsurance Accounting knowledge to the test? Let's get started with our carefully curated MCQs!

Reinsurance Accounting MCQs | Page 11 of 16

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Q101.
What are earned premiums?

a.

Premiums ceded and included in the accounts for the year in question

b.

Premiums paid in advance for future years

c.

Premiums received from reinsurers

d.

Premiums received from policyholders after the year-end

Discuss
Answer: (a).Premiums ceded and included in the accounts for the year in question Explanation:Earned premiums are the premiums ceded and included in the accounts for the year in question.
Q102.
What is deducted from earned premiums?

a.

Premiums received from policyholders after the year-end

b.

Premiums paid in advance for future years

c.

Reserve for unexpired risks at the end of the current year

d.

Reserve for unexpired risks brought forward from the previous year

Discuss
Answer: (c).Reserve for unexpired risks at the end of the current year Explanation:The reserve for unexpired risks at the end of the current year is deducted from earned premiums.
Q103.
What are incurred losses?

a.

Losses paid and included in the accounts for the year in question

b.

Losses incurred but not yet paid

c.

Losses recovered from reinsurers

d.

Losses incurred in the previous year

Discuss
Answer: (a).Losses paid and included in the accounts for the year in question Explanation:Incurred losses are losses paid and included in the accounts for the year in question.
Q104.
What is added to incurred losses?

a.

Losses incurred in the previous year

b.

Losses paid and included in the accounts for the year in question

c.

Outstanding losses at the end of the current year

d.

Outstanding losses at the end of the previous year

Discuss
Answer: (c).Outstanding losses at the end of the current year Explanation:The outstanding losses at the end of the current year are added to incurred losses.
Q105.
What is the purpose of a provisional commission?

a.

To stabilize the results under a treaty

b.

To ensure timely payment of commission

c.

To maximize profits for the reinsurer

d.

To reduce the loss in bad years

Discuss
Answer: (b).To ensure timely payment of commission Explanation:The purpose of a provisional commission is to ensure timely payment of commission.
Q106.
How is the provisional commission determined?

a.

It is a fixed percentage of the earned premiums

b.

It is a fixed percentage of the incurred losses

c.

It is a mid point between the minimum and maximum commission

d.

It is based on the reinsurer's profit margin

Discuss
Answer: (c).It is a mid point between the minimum and maximum commission Explanation:The provisional commission is determined as a mid point between the minimum and maximum commission.
Q107.
What does a sliding scale of commission aim to do?

a.

Maximize profits for the reinsurer in good years

b.

Maximize profits for the ceding insurer in bad years

c.

Stabilize the results under a treaty

d.

Eliminate the need for provisional commission

Discuss
Answer: (c).Stabilize the results under a treaty Explanation:A sliding scale of commission aims to stabilize the results under a treaty.
Q108.
What is the purpose of the table of "Sliding Scale of Commission"?

a.

To determine the provisional commission rate

b.

To calculate the actual rate of commission payable

c.

To set upper and lower limits for the commission rate

d.

To compare the loss ratio with an agreed scale

Discuss
Answer: (c).To set upper and lower limits for the commission rate Explanation:The purpose of the table of "Sliding Scale of Commission" is to set upper and lower limits for the commission rate.
Q109.
What is the purpose of overriding commission?

a.

To provide additional commission to the reinsurer

b.

To provide additional commission to the ceding insurer

c.

To reduce the original commission paid by the reinsurer

d.

To reduce the original commission paid by the ceding insurer

Discuss
Answer: (a).To provide additional commission to the reinsurer Explanation:The overriding commission is an additional commission paid by the reinsurer to the ceding insurer in the case of inward retrocession.
Q110.
When a reinsurer receives business as an inward retrocession, the reinsurer will allow the ceding insurer _____________ over and above any share of the original commission that he may pay.

a.

Overriding commission

b.

Brokerage

c.

Profit commission

d.

Flat rate commission

Discuss
Answer: (a).Overriding commission Explanation:When a reinsurer receives business as an inward retrocession, the reinsurer will allow the ceding insurer overriding commission over and above any share of the original commission that he may pay. This means that in the case of inward retrocession, where a reinsurer receives business from another reinsurer, the reinsurer will provide an additional commission known as overriding commission to the ceding insurer. This overriding commission is in addition to any share of the original commission that the reinsurer may pay to the ceding insurer. It serves as an incentive or compensation for the ceding insurer in such reinsurance arrangements.
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