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 8 of 16

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Q71.
In India, which of the following Acts governs the law and regulation relating to use of foreign exchange in respect of insurance and reinsurance transactions overseas?

a.

Insurance Act 1938

b.

Companies Act 1956

c.

Foreign Exchange Management Act, 2000

d.

Income Tax Act 1961

Discuss
Answer: (c).Foreign Exchange Management Act, 2000 Explanation:In India, the law and regulation relating to the use of foreign exchange in respect of insurance and reinsurance transactions overseas are governed by the Foreign Exchange Management Act, 2000. This act provides the framework for regulating foreign exchange transactions and managing foreign exchange resources in India.
Q72.
What aspects is reinsurance accounting comprehensively connected with?

a.

Technical aspects only

b.

Financial aspects only

c.

Legal aspects only

d.

Technical, financial, legal, and underwriting aspects

Discuss
Answer: (d).Technical, financial, legal, and underwriting aspects Explanation:Reinsurance accounting is comprehensively connected with technical, financial, legal, and underwriting aspects of reinsurance.
Q73.
How is reinsurance commission typically expressed?

a.

Fixed amount

b.

Percentage of claims

c.

Percentage of premium

d.

Variable amount based on profit

Discuss
Answer: (c).Percentage of premium Explanation:Reinsurance commission is typically expressed as a percentage of the premium.
Q74.
What is overriding commission in reinsurance?

a.

Commission paid by the ceding insurer to the reinsurer

b.

Commission paid by the reinsurer to the ceding insurer

c.

Additional commission paid by the reinsurer to the ceding insurer for inward retrocession

d.

Commission paid by the reinsurer to the retrocessionaire

Discuss
Answer: (c).Additional commission paid by the reinsurer to the ceding insurer for inward retrocession 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.
Q75.
How is the percentage of brokerage payable in reinsurance determined?

a.

It is fixed by the reinsurer.

b.

It is fixed by the ceding insurer.

c.

It is negotiated between the reinsurer and the ceding insurer.

d.

It is stipulated in the treaty agreement.

Discuss
Answer: (d).It is stipulated in the treaty agreement. Explanation:The percentage of brokerage payable is applied to premiums written on gross, net, or partial net basis, and this must be clearly stipulated in the treaty agreement.
Q76.
What is profit commission in reinsurance?

a.

Commission paid by the ceding insurer to the reinsurer on profitable treaties

b.

Commission paid by the reinsurer to the ceding insurer on profitable treaties

c.

Additional percentage payable to the reinsurer on profitable treaties

d.

Additional percentage payable to the ceding insurer on profitable treaties

Discuss
Answer: (b).Commission paid by the reinsurer to the ceding insurer on profitable treaties Explanation:Profit commission is an additional percentage payable to a ceding insurer on profitable treaties in accordance with an agreed formula. It is therefore an incentive for ceding insurers to produce profitable business.
Q77.
Which country levies a Service Tax of 5% on direct premium?

a.

United States

b.

Switzerland

c.

India

d.

Germany

Discuss
Answer: (c).India Explanation:In India, a Service Tax of 5% on direct premium is levied.
Q78.
What law and regulation govern the use of foreign exchange in respect of insurance and reinsurance transactions overseas in India?

a.

Insurance Act 1938

b.

Companies Act 1956

c.

Foreign Exchange Management Act, 2000

d.

Income Tax Act 1961

Discuss
Answer: (c).Foreign Exchange Management Act, 2000 Explanation:In India, the use of foreign exchange in respect of insurance and reinsurance transactions overseas is governed by the Foreign Exchange Management Act, 2000.
Q79.
Who reviews and approves the reinsurance arrangements of the GIC Re?

a.

Reserve Bank of India

b.

Government of India

c.

Insurance Regulatory and Development Authority of India

d.

Securities and Exchange Board of India

Discuss
Answer: (b).Government of India Explanation:The reinsurance arrangements of the GIC Re are reviewed annually and approved by the Government of India.
Q80.
Which regulatory authority grants permission to GIC Re as an authorized dealer to arrange remittances of foreign exchange for reinsurance arrangements?

a.

Reserve Bank of India

b.

Insurance Regulatory and Development Authority of India

c.

Securities and Exchange Board of India

d.

Foreign Exchange Management Authority of India

Discuss
Answer: (a).Reserve Bank of India Explanation:Permission is granted by the Reserve Bank of India to GIC Re as an authorized dealer to arrange remittances of foreign exchange in respect of their reinsurance arrangements. This indicates that the Reserve Bank of India is the regulatory authority responsible for granting such permission in the context of reinsurance arrangements involving GIC Re.
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