Retentions MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Retentions, 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 Retentions 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 Retentions mcq questions that explore various aspects of Retentions problems. Each MCQ is crafted to challenge your understanding of Retentions 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 Retentions 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 Retentions. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

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Retentions MCQs | Page 10 of 24

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Q91.
When is it possible to build up a treaty with a reasonable balance?

a.

When the second surplus treaty is very unbalanced

b.

When a large number of risks are ceded to the second surplus treaty

c.

Both a and b

d.

None of the above

Discuss
Answer: (b).When a large number of risks are ceded to the second surplus treaty Explanation:When the portfolio of business is large and a large number of risks are ceded to the second surplus treaty, it may be possible to build up a treaty with a reasonable balance and even exchange it against incoming business.
Q92.
What information do reinsurers require when Auto/Fac cover contains only peak risks?

a.

Detailed information regarding the portfolio of business ceded there under

b.

Information regarding the limit of cover provided

c.

Information regarding the past record of large losses

d.

None of the above

Discuss
Answer: (a).Detailed information regarding the portfolio of business ceded there under Explanation:Reinsurers require some detailed information regarding the portfolio of business ceded there under when Auto/Fac cover contains only peak risks.
Q93.
What do reinsurers on higher surpluses and on facultative reinsurance examine?

a.

Adequacy of rate levels

b.

Underwriting data and particulars of rates

c.

Risk improvements and rates

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Reinsurers on higher surpluses and on facultative reinsurance examine the adequacy of rate levels, underwriting data and particulars of rates, as well as risk improvements and rates. When considering a facultative offer, reinsurers ask for detailed underwriting data and particulars of rates, and in the placement of the top surplus, selection of the reinsurer requires a great deal of care, and not only should the reinsurer be financially sound but he should also be known for his reasonableness and promptness. The expertise and knowledge of markets which the brokers possess is very useful in placing such surpluses. Furthermore, in some of the underdeveloped markets, reinsurers or brokers even inspect the risks themselves and advise on risk improvements, rates, etc. Hence, the correct answer is d, all of the above.
Q94.
When may insurers resort to group underwriting?

a.

When they have a common management or common ownership

b.

When they are individually large

c.

When they have high retention levels

d.

None of the above

Discuss
Answer: (a).When they have a common management or common ownership Explanation:Insurers may resort to group underwriting when they have a common management or common ownership.
Q95.
What is group underwriting?

a.

When insurers keep a retention representing the combined capacity of the group and operate a group reinsurance programme

b.

When insurers cede out a substantial portion of the premium

c.

When insurers retain a larger portion of the premium

d.

None of the above

Discuss
Answer: (a).When insurers keep a retention representing the combined capacity of the group and operate a group reinsurance programme Explanation:Group underwriting is when insurers keep a retention representing the combined capacity of the group and operate a group reinsurance programme.
Q96.
For what type of risks is reinsurance on an excess of loss basis possible?

a.

Large risks with considerable facultative reinsurance

b.

Small risks with low retention levels

c.

Risks with a low explosion hazard

d.

Risks with no catastrophe perils covered

Discuss
Answer: (a).Large risks with considerable facultative reinsurance Explanation:Reinsurance on an excess of loss basis is possible for large risks with considerable facultative reinsurance.
Q97.
What happens when the excess of loss reinsurer asks for too big a share of the original premium?

a.

The excess of loss reinsurer pays the claims up to the loss retention figure

b.

The ceding insurer is left with a totally inadequate premium to pay claims up to the loss retention figure

c.

The ceding insurer agrees to pay the excess of loss reinsurer's requested share

d.

None of the above

Discuss
Answer: (b).The ceding insurer is left with a totally inadequate premium to pay claims up to the loss retention figure Explanation:When the excess of loss reinsurer asks for too big a share of the original premium, the ceding insurer is left with a totally inadequate premium to pay claims up to the loss retention figure.
Q98.
What types of risks are covered under engineering insurance?

a.

Fire risks

b.

Marine risks

c.

Motor risks

d.

Machinery breakdown, boiler explosion, erection all risks, and contractors’ all risks business.

Discuss
Answer: (d).Machinery breakdown, boiler explosion, erection all risks, and contractors’ all risks business. Explanation:Machinery breakdown, boiler explosion, erection all risks, and contractors’ all risks business are covered under engineering insurance.
Q99.
Why do many insurers need to liaise with specialist reinsurers in engineering insurance?

a.

To minimize the risk exposure

b.

To determine commission terms

c.

To provide technical assistance in matters of rating and other technical matters

d.

To increase their profitability

Discuss
Answer: (c).To provide technical assistance in matters of rating and other technical matters Explanation:In engineering insurance, it is customary to have a close liaison with specialist reinsurers in matters of rating and other technical matters.
Q100.
What is the general practice for retentions in engineering insurance?

a.

Retentions are generally large

b.

Retentions are generally unbalanced

c.

Retentions are generally small

d.

Retentions are not required

Discuss
Answer: (c).Retentions are generally small Explanation:Retentions in engineering insurance are generally small.
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