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.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Reinsurance Distributing the Programme Arrangements. 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 Distributing the Programme Arrangements knowledge to the test? Let's get started with our carefully curated MCQs!

Reinsurance Distributing the Programme Arrangements MCQs | Page 9 of 10

Discover more Topics under IC85 Reinsurance Management

Q81.
What is the purpose of involving professional reinsurers and intermediaries in the programme design stage?

a.

To increase the profitability of the insurance program

b.

To provide additional expertise and strength to the design process

c.

To reduce the overall cost of reinsurance covers

d.

To exclude hazardous risks from the treaty portfolio

Discuss
Answer: (b).To provide additional expertise and strength to the design process Explanation:The involvement of professional reinsurers and intermediaries in the programme design stage adds strength to the design process by providing additional expertise and knowledge.
Q82.
Why do ceding insurers protect the experience of outward treaty in reciprocal reinsurance trading?

a.

To utilize the full treaty capacity for hazardous risks

b.

To arrange excess of loss cover for the treaty portfolio

c.

To strengthen their relationship with professional reinsurers

d.

To maximize their profitability in the reinsurance market

Discuss
Answer: (b).To arrange excess of loss cover for the treaty portfolio Explanation:Ceding insurers protect the experience of outward treaty in reciprocal reinsurance trading by measures such as arranging excess of loss cover to safeguard the treaty portfolio.
Q83.
In which lines of business is reciprocal reinsurance trading more commonly used?

a.

Life insurance

b.

Health insurance

c.

Fire insurance

d.

Auto insurance

Discuss
Answer: (c).Fire insurance Explanation:Reciprocal reinsurance trading is more often used in the case of fire and hull lines of business compared to other lines of business.
Q84.
What is group underwriting in the insurance industry?

a.

A practice of redistributing business among group members

b.

The process of ceding risks to professional reinsurers

c.

The pooling of net retentions among insurers with common ownership

d.

The arrangement of excess of loss covers for the entire group portfolio

Discuss
Answer: (c).The pooling of net retentions among insurers with common ownership Explanation:Group underwriting refers to the practice where insurers with common management or common ownership keep a retention representing the combined capacity of all the group companies and operate a group reinsurance program.
Q85.
How does market pooling work in the insurance industry?

a.

Insurers combine their net retentions and redistribute them among the group members

b.

Each insurer keeps their own net retention and cedes to the pool based on defined limits

c.

Excess of loss covers are arranged to protect the pooled business

d.

Market pooling is primarily used for life insurance products

Discuss
Answer: (b).Each insurer keeps their own net retention and cedes to the pool based on defined limits Explanation:In market pools, each insurer keeps their own net retention and thereafter cedes to the pool on a priority basis up to defined limits.
Q86.
What is the role of an intermediary in reciprocal reinsurance negotiations?

a.

To provide 100% premium and profit reciprocity

b.

To redistribute business among group members

c.

To handle sensitive negotiations and placement for reinsurance protection

d.

To maintain the profitability of the reinsurance market

Discuss
Answer: (c).To handle sensitive negotiations and placement for reinsurance protection Explanation:An intermediary plays a role in the sensitive handling of reciprocal reinsurance negotiations and placement for reinsurance protection.
Q87.
Can professional reinsurers provide 100% premium or profit reciprocity?

a.

Yes, they can provide 100% reciprocity

b.

No, they cannot provide any form of reciprocity

c.

It depends on the negotiation process

d.

They can provide profit reciprocity but not premium reciprocity

Discuss
Answer: (b).No, they cannot provide any form of reciprocity Explanation:Professional reinsurers cannot provide 100% premium or profit reciprocity.
Q88.
Which of the following is issued by an intermediary after the issue of cover note?

a.

FPR

b.

Policy document

c.

Claim document

d.

KYC form

Discuss
Answer: (b).Policy document Explanation:After the issuance of a cover note, an intermediary typically issues a policy document. The policy document contains the detailed terms, conditions, and coverage provided by the insurance policy. It serves as the official contract between the insurer and the insured, outlining the rights and obligations of both parties. The policy document supersedes the temporary cover provided by the cover note and provides comprehensive coverage details. Options a, c, and d are not typically issued by an intermediary after the cover note but may be relevant in other stages of the insurance process. FPR (First Premium Receipt) is a document acknowledging the payment of the first premium, a claim document is used to initiate the claims process, and a KYC (Know Your Customer) form is used to collect customer information for compliance purposes.
Q89.
Which of the following treaty can be placed in weak reinsurance market conditions?

a.

Surplus treaty

b.

Quota share treaty

c.

Facultative obligatory treaty

d.

Excess of loss treaty

Discuss
Answer: (c).Facultative obligatory treaty Explanation:In weak reinsurance market conditions, where the capacity and willingness of reinsurers to provide coverage may be limited, a facultative obligatory treaty can be placed. A facultative obligatory treaty provides coverage for individual risks on a case-by-case basis. It allows the insurer to seek reinsurance for specific risks that require additional protection or are considered more challenging. In weak market conditions, reinsurers may be more inclined to consider facultative obligatory treaties as they have the flexibility to assess and underwrite risks individually rather than committing to broader proportional or excess of loss treaties.
Q90.
Which of the following is a benefit derived by ceding insurers from a reciprocal exchange of reinsurance treaties?

a.

Ceding insurers are able to secure a profit advantage on the strength of the superior balance of their portfolio.

b.

It does not enable direct insurers to produce a more balanced book of business for themselves and for their treaty reinsurers.

c.

It provides a wider spread for the net retained portfolio of the insurer with an improved balance, thus ensuring greater stability in underwriting surplus.

d.

This arrangement is useful in widely dispersed risks such as in agriculture exposed to pest damage.

Discuss
Answer: (c).It provides a wider spread for the net retained portfolio of the insurer with an improved balance, thus ensuring greater stability in underwriting surplus. Explanation:A reciprocal exchange of reinsurance treaties benefits ceding insurers by providing a wider spread for their net retained portfolio. By engaging in reciprocal reinsurance, insurers can spread their risk across multiple reinsurers, thereby diversifying their portfolio. This diversification leads to an improved balance in the insurer's portfolio, reducing concentration on specific risks and enhancing stability in underwriting surplus. The wider spread of risks helps to mitigate the potential impact of individual losses, as losses from one area or line of business can be offset by gains in others.
Page 9 of 10