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!

So, are you ready to put your Retentions knowledge to the test? Let's get started with our carefully curated MCQs!

Retentions MCQs | Page 12 of 24

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Q111.
What types of risks carry catastrophe exposures in Personal Accident business?

a.

Group PA policies and passengers in a vehicle or aircraft

b.

Cash-in-Transit and jewellers’ block

c.

Marine cargo and limited terms

d.

Burglary and excess of loss

Discuss
Answer: (a).Group PA policies and passengers in a vehicle or aircraft Explanation:Personal Accident business carries catastrophe exposures in respect of certain types of risks such as group PA policies and passengers in a vehicle or aircraft.
Q112.
What is the usual method of reinsurance for burglary?

a.

Surplus basis

b.

Excess of loss

c.

Proportional

d.

Catastrophe

Discuss
Answer: (b).Excess of loss Explanation:While burglary is capable of reinsurance on excess of loss basis, the other classes will require substantial premium on excess of loss basis.
Q113.
What are some important aspects to consider when analyzing the gross portfolio for marine-cargo reinsurance?

a.

Cover granted, pattern of exposures, nature of cargo, age and size of vessels, premium rates, number of reporting offices

b.

Location, separation, demarcation, class of construction and fire protection

c.

Group PA policies, passengers in a vehicle or aircraft, and catastrophic exposures

d.

Excess of loss, surplus basis, and proportional

Discuss
Answer: (a).Cover granted, pattern of exposures, nature of cargo, age and size of vessels, premium rates, number of reporting offices Explanation:There are several important aspects to consider when analyzing the gross portfolio for marine-cargo reinsurance, including whether the cover granted in the majority of cases is on all risks terms or limited terms, whether the pattern of exposures per vessel shows a wide variation or is clustered around a certain level with a minority of cases showing materially different exposures, what is the nature of cargo insured and, if possible, a breakdown of the total premium by broad categories of cargo, a breakdown of the premium by the age and size of the vessels carrying the cargo, whether the rates of premium are generally satisfactory, and the number of reporting offices and the feasibility of fully recording commitments in the voyage register.
Q114.
What are the three types of miscellaneous accident business?

a.

Cash-in-Transit, burglary, and group PA policies

b.

Personal Accident, burglary, and jewellers’ block

c.

Cash-in-Transit, group PA policies, and passengers in a vehicle or aircraft

d.

Personal Accident, Cash-in-Transit, and Burglary

Discuss
Answer: (d).Personal Accident, Cash-in-Transit, and Burglary Explanation:The three types of miscellaneous accident business are Personal Accident, Cash-in-Transit, and Burglary.
Q115.
What is the normal method of reinsurance in the Miscellaneous Department?

a.

Quota share basis

b.

Surplus basis

c.

Excess of loss basis

d.

All of the above

Discuss
Answer: (b).Surplus basis Explanation:The normal method of reinsurance in the Miscellaneous Department is surplus basis.
Q116.
What is the level of retention based on in the Personal Accident business?

a.

Total miscellaneous accident premium base

b.

Total number of claims filed

c.

Total amount of premium received

d.

None of the above

Discuss
Answer: (a).Total miscellaneous accident premium base Explanation:The level of retention in the Personal Accident business is based on the total miscellaneous accident premium base.
Q117.
What type of reinsurance is capable of being used for burglary?

a.

Quota share basis

b.

Surplus basis

c.

Excess of loss basis

d.

both a and b

Discuss
Answer: (c).Excess of loss basis Explanation:Burglary is capable of reinsurance on an excess of loss basis.
Q118.
Why is a quota share treaty not a satisfactory solution for insurers?

a.

It does not permit full utilization of the retention capacity of the insurer.

b.

It requires too much paperwork.

c.

It is too expensive.

d.

It is not compatible with the portfolio of the ceding insurer.

Discuss
Answer: (a).It does not permit full utilization of the retention capacity of the insurer. Explanation:A quota share treaty is not a satisfactory solution for insurers because it does not permit full utilization of the retention capacity of the insurer.
Q119.
What are the two distinct classes of loss exposures?

a.

Total loss and GA claims

b.

Cargo claims and GA claims

c.

Total loss and particular average claims

d.

General average and particular average claims

Discuss
Answer: (c).Total loss and particular average claims Explanation:The two distinct classes of loss exposures are total loss and particular average claims.
Q120.
How are retentions fixed for smaller and older vessels?

a.

They are scaled up.

b.

They are not adjusted.

c.

They are scaled down.

d.

They are based on the type of cargo.

Discuss
Answer: (c).They are scaled down. Explanation:Retentions are normally scaled down for smaller and older vessels because the probability of total loss or GA claims by a smaller or older vessel is higher than by a larger or new vessel.
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