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!

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Reinsurance Accounting MCQs | Page 4 of 16

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Q31.
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.
Q32.
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.
Q33.
How can the overriding commission payable by the reinsurer be calculated?What is brokerage in reinsurance?

a.

On gross premiumAdditional commission paid by the reinsurer to the broker

b.

On net premiumAdditional commission paid by the broker to the reinsurer

c.

On partial net premiumsAdditional payment made by the broker to the ceding insurer

d.

All of the aboveAdditional payment made by the ceding insurer to the broker

Discuss
Answer: (b).All of the aboveAdditional commission paid by the reinsurer to the broker Explanation:The overriding commission payable by the reinsurer can be calculated on gross premium, net premium, or partial net premiums as stipulated in the treaty agreement.Brokerage is the additional commission paid by the reinsurer to the broker in reinsurance transactions.
Q34.
How can the overriding commission payable by the reinsurer be calculated?

a.

On gross premium

b.

On net premium

c.

On partial net premiums

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The overriding commission payable by the reinsurer can be calculated on gross premium, net premium, or partial net premiums as stipulated in the treaty agreement.
Q35.
When is the interest credited to reinsurers in treaties with provision for retention of reserves?

a.

In the quarter when the reserve is released

b.

In the quarter when the reserve is retained

c.

At the end of the treaty year

d.

At the beginning of the treaty year

Discuss
Answer: (a).In the quarter when the reserve is released Explanation:The interest is credited to reinsurers in the quarter when the reserve is released.
Q36.
How is the net return to the reinsurer affected by tax regulations?

a.

It increases the net return

b.

It decreases the net return

c.

It has no effect on the net return

d.

It depends on the specific tax regulations

Discuss
Answer: (b).It decreases the net return Explanation:The net return to the reinsurer is decreased as the interest is subject to tax as per local regulations.
Q37.
What is the nature of accounts under non-proportional treaties?

a.

They focus on premium and claim reserves

b.

They primarily deal with losses on a cash loss basis

c.

They involve profit commission calculations

d.

They require complex financial statements

Discuss
Answer: (b).They primarily deal with losses on a cash loss basis Explanation:Accounts under non-proportional treaties primarily deal with losses on a cash loss basis.
Q38.
How is the percentage of brokerage payable determined?

a.

It is a fixed percentage applied to premiums written on a gross basis

b.

It is a fixed percentage applied to premiums written on a net basis

c.

It is a fixed percentage applied to premiums written on a partial net basis

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The percentage of brokerage payable can be applied to premiums written on a gross basis, net basis, or partial net basis, as specified in the treaty agreement.
Q39.
What is profit commission in reinsurance?

a.

Additional premium charged on profitable treaties

b.

Additional percentage payable to the ceding insurer on profitable treaties

c.

Additional commission paid by the ceding insurer to the reinsurer on profitable treaties

d.

Additional payment made by the reinsurer to the ceding insurer on profitable treaties

Discuss
Answer: (b).Additional percentage payable to the ceding insurer on profitable treaties Explanation:Profit commission is an additional percentage payable to the ceding insurer on profitable treaties as an incentive for producing profitable business.
Q40.
What are non-proportional treaty accounts not subject to?

a.

Premium reserves

b.

Claim reserves

c.

Profit commission

d.

Tax regulations

Discuss
Answer: (c).Profit commission Explanation:Non-proportional treaty accounts are not subject to profit commission.
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