Reinsurance Distributing the Programme Arrangements MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Reinsurance Distributing the Programme Arrangements, 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 Distributing the Programme Arrangements MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Reinsurance Distributing the Programme Arrangements MCQs | Page 10 of 10

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Q91.
The practice of reciprocal reinsurance trading is more often used in the case of __________ business.

a.

Fire insurance

b.

Life insurance

c.

Aviation insurance

d.

Accident/liability insurance

Discuss
Answer: (a).Fire insurance Explanation:The practice of reciprocal reinsurance trading is more commonly used in the case of fire insurance. Reciprocal reinsurance involves an arrangement where insurers agree to share risks with each other. Fire insurance, which provides coverage for damages and losses caused by fire, often involves a higher frequency of claims compared to other lines of business. To manage this risk effectively, insurers may engage in reciprocal reinsurance trading, allowing them to spread the risk and share the burden of fire-related claims with other insurers.
Q92.
The primary consideration in the placement of cargo treaties is the _______________.

a.

Stability of the reinsurance arrangements.

b.

Spreading of the risk in other portfolios

c.

To obtain large reinsurance capacity

d.

To maintain consistent record of profits

Discuss
Answer: (a).Stability of the reinsurance arrangements. Explanation:The primary consideration in the placement of cargo treaties is the stability of the reinsurance arrangements. Cargo insurance involves covering risks associated with the transportation of goods, which can be subject to various perils and hazards during transit. Insurers place cargo treaties to secure reinsurance arrangements that provide stability and reliability in terms of coverage and claims settlement. By entering into stable reinsurance arrangements, insurers can ensure that they have adequate support and financial capacity in the event of cargo-related claims. This helps to protect their own financial stability and enables them to fulfill their obligations to policyholders. Stability in reinsurance arrangements also provides insurers with the confidence and certainty they need to underwrite cargo risks with confidence.
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