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.

In this section, you'll find a wide range of Reinsurance Distributing the Programme Arrangements mcq questions that explore various aspects of Reinsurance Distributing the Programme Arrangements problems. Each MCQ is crafted to challenge your understanding of Reinsurance Distributing the Programme Arrangements 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 Distributing the Programme Arrangements MCQs are your pathway to success in mastering this essential IC85 Reinsurance Management topic.

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Reinsurance Distributing the Programme Arrangements MCQs | Page 8 of 10

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Q71.
What should be considered when selecting a reinsurer for the placement of top surplus?

a.

The reinsurer's financial soundness and promptness

b.

The reinsurer's willingness to drive a hard bargain

c.

The reinsurer's expertise in risk inspections

d.

The reinsurer's familiarity with underdeveloped markets

Discuss
Answer: (a).The reinsurer's financial soundness and promptness Explanation:When selecting a reinsurer for the placement of top surplus, it is important to consider their financial soundness and known reasonableness and promptness. This indicates that the reinsurer's financial stability and ability to handle the placement efficiently are crucial factors. Therefore, option a is the correct answer.
Q72.
What is the purpose of arranging working covers on a per event basis and dovetailing them into the catastrophe cover?

a.

To secure complete protection at an economic cost

b.

To obtain free catastrophe cover without any working covers

c.

To maximize the claims recovered from the catastrophe cover

d.

To minimize the competition among intermediaries for business

Discuss
Answer: (a).To secure complete protection at an economic cost Explanation:Arranging working covers on a per event basis and dovetailing them into the catastrophe cover is aimed at securing complete protection at an economic cost. Therefore, option a is the correct answer.
Q73.
Why should one exercise caution when examining offers with lower rates from different reinsurers?

a.

The rates may be based on incomplete information about the ceding insurer's business.

b.

Lower rates indicate unstable reinsurance markets.

c.

Intermediaries may switch reinsurers frequently, causing loss of goodwill.

d.

Such offers often result in inefficient and slow service to the insurer's clients.

Discuss
Answer: (a).The rates may be based on incomplete information about the ceding insurer's business. Explanation:When examining offers with lower rates from different reinsurers, caution should be exercised because the rates may be based on incomplete information about the ceding insurer's business. This suggests that the accuracy and reliability of the information used to derive the rates may be questionable. Therefore, option a is the correct answer.
Q74.
What is the importance of keeping the structure of reinsurance arrangements and terms under constant review?

a.

To maintain the goodwill and reserves with existing reinsurers

b.

To maximize claims recovery from the reinsurance programme

c.

To minimize competition among intermediaries for business

d.

To secure complete protection at an economic cost

Discuss
Answer: (a).To maintain the goodwill and reserves with existing reinsurers Explanation:Keeping the structure of reinsurance arrangements and terms under constant review is important to maintain the goodwill and reserves built up with existing reinsurers. This suggests that regular review helps in nurturing and preserving the relationships and financial stability with current reinsurers. Therefore, option a is the correct answer.
Q75.
What is the benefit of good reinsurance arrangements for the insurer?

a.

Increased competition among intermediaries for business

b.

Efficient and speedy service to the insurer's clients

c.

Higher claims experience and rate levels

d.

Lower costs of catastrophe cover

Discuss
Answer: (b).Efficient and speedy service to the insurer's clients Explanation:Good reinsurance arrangements provide a great deal of confidence to the reinsurers and enable the insurer to provide efficient and speedy service to their own clients. This indicates that well-structured reinsurance arrangements contribute to the insurer's ability to serve their clients effectively. Therefore, option b is the correct answer.
Q76.
What is the main difference between direct placements and dealing through intermediaries?

a.

Direct placements offer lower rates, while intermediaries offer greater expertise.

b.

Direct placements target 100% reciprocity, while intermediaries provide less than 100% reciprocity.

c.

Direct placements involve professional reinsurers, while intermediaries work with quality reinsurers.

d.

Direct placements require less brokerage cost, while intermediaries increase the original gross rate.

Discuss
Answer: (b).Direct placements target 100% reciprocity, while intermediaries provide less than 100% reciprocity. Explanation:A direct placement may have a limitation in achieving 100% reciprocity, while an intermediary-driven program can work towards 100% reciprocity. This suggests that direct placements aim for full reciprocity, whereas intermediaries may not achieve the same level. Therefore, option b is the correct answer.
Q77.
What is one of the challenges faced by intermediaries in the reinsurance market?

a.

Marginalization by professional reinsurers due to direct placements

b.

High brokerage costs borne by accepting reinsurers

c.

Limited access to quality reinsurers in a hard market

d.

Inability to drive competition and negotiate lower rates

Discuss
Answer: (a).Marginalization by professional reinsurers due to direct placements Explanation:Intermediaries can face marginalization by professional reinsurers when substantial direct placements are accepted, which reduces their presence in the market. This suggests that direct placements can undermine the role of intermediaries. Therefore, option a is the correct answer.
Q78.
What is the advantage of using intermediaries in a soft market?

a.

Access to quality reinsurers with lower rates

b.

Greater flexibility in cover options

c.

Higher level of expertise compared to direct placements

d.

Reduced brokerage costs for accepting reinsurers

Discuss
Answer: (a).Access to quality reinsurers with lower rates Explanation:Intermediaries drive competition in the world markets and target lower rates from quality reinsurers in a soft market. This indicates that using intermediaries can provide access to quality reinsurers with more favorable rates. Therefore, option a is the correct answer.
Q79.
What is the common objective of both direct placements and dealing through intermediaries?

a.

Achieving 100% reciprocity in reinsurance programs

b.

Maximizing profitability for professional reinsurers

c.

Minimizing brokerage costs for insurers' clients

d.

Ensuring the success of the reinsurance program

Discuss
Answer: (d).Ensuring the success of the reinsurance program Explanation:The final objective is the success of the reinsurance program, regardless of whether direct placements or intermediaries are used. Both approaches aim to contribute to the success of the reinsurance program. Therefore, option d is the correct answer.
Q80.
As per market practice, the intermediary issues a cover note to the insurer. Which of the following is not included in it?

a.

Terms of placement

b.

Premium

c.

Claim recoveries

d.

Participating underwriters with their shares set opposite their names

Discuss
Answer: (c).Claim recoveries Explanation:The intermediary issues a cover note summarizing the terms of placement, premium, and participating underwriters with their shares set opposite their names. However, it does not mention anything about claim recoveries being included in the cover note. Therefore, option c is not included in the cover note.
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