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 14 of 24

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Q131.
What is the purpose of splitting the cover into layers in cargo insurance?

a.

To reduce the overall premium cost for the insurer

b.

To provide protection against accumulation on shore

c.

To provide additional coverage for large GA claims

d.

To protect against inflationary impacts on claims values

Discuss
Answer: (c).To provide additional coverage for large GA claims Explanation:Splitting the cover into layers allows for a suitable extra to be added for large GA claims.
Q132.
How is the premium for excess of loss cover determined?

a.

By studying the pattern of exposures in the portfolio

b.

Based on past loss record

c.

Through a technical rating of the basis cover

d.

By assessing the accumulation hazard at ports

Discuss
Answer: (b).Based on past loss record Explanation:Reinsurers may have to fall back on the claims record to derive their rates for excess of loss cover.
Q133.
What is a voyage register in cargo insurance?

a.

A record of individual insurances entered by the insurer

b.

A record of large consignments advised by one vessel

c.

A register of shore accumulations

d.

A record of documents up to a particular size

Discuss
Answer: (a).A record of individual insurances entered by the insurer Explanation:A voyage register is maintained in cargo insurance to record individual insurances and determine recovery due from reinsurers.
Q134.
What is the primary objective in designing surplus treaties in the cargo department?

a.

To secure automatic reinsurance facility per bottom

b.

To establish a maximum premium for each consignment

c.

To minimize the cost of excess of loss cover

d.

To avoid the need for facultative reinsurance

Discuss
Answer: (a).To secure automatic reinsurance facility per bottom Explanation:The primary objective is to secure automatic reinsurance facility per bottom up to the maximum foreseeable extent.
Q135.
What are the two broad categories of hull insurance?

a.

Cargo and local crafts

b.

Ocean-going vessels and local crafts

c.

Ocean-going vessels and tankers

d.

Cargo and tankers

Discuss
Answer: (b).Ocean-going vessels and local crafts Explanation:Hull insurance falls into two broad categories - ocean-going vessels, including bulk carriers, tankers, and OBOS, and local crafts such as barges, lighters, launches, tugs, dredgers, trawlers, etc.
Q136.
What is the approach of some countries regarding the freedom of rating and handling claims for larger vessels?

a.

They follow the Joint Hull Formula

b.

They are not concerned about the rating and claims processing of larger vessels

c.

They do not insure larger vessels

d.

They follow their own set of rules and regulations

Discuss
Answer: (a).They follow the Joint Hull Formula Explanation:Some countries have been able to achieve the freedom of rating and handling claims for larger vessels, but their approach in the matter is kept under review, and reinsurers, especially in the London market, like to be reassured that the Joint Hull Formula will be followed.
Q137.
What is the agreement that exists in the London market regarding the total permissible commission on hull reinsurance?

a.

No such agreement exists

b.

There is a strict limit on the total permissible commission

c.

The limit on the total permissible commission is not strictly followed

d.

Insurers are not allowed to earn profit commission on hull reinsurance

Discuss
Answer: (c).The limit on the total permissible commission is not strictly followed Explanation:There is an agreement existing in the London market, although not strictly followed, limiting the total permissible commission on hull reinsurance.
Q138.
What is a working excess of loss cover?

a.

A cover that provides protection against small losses

b.

A cover that provides protection against large losses

c.

A cover that costs a pro-rata premium like a quota-share

d.

A cover that is available only for ocean-going vessels

Discuss
Answer: (b).A cover that provides protection against large losses Explanation:It is rare to see an insurer carry high retention protected by a working excess of loss cover because a very substantial portion of the hull premium is required to pay total loss and large partial losses.
Q139.
What is the purpose of rating expertise in aviation and special types of liability business?

a.

To enhance the spread of its net account

b.

To limit individual freedom of companies

c.

To reduce competition for business

d.

To improve the retention capacity of insurers

Discuss
Answer: (a).To enhance the spread of its net account Explanation:Rating expertise is used in aviation and special types of liability business to enhance the spread of the insurer's net account and improve its retention capacity.
Q140.
How is most of the reinsurance cover for aviation and special types of liability business placed?

a.

Through surplus treaties with high retention

b.

Through facultative placements with low retention

c.

Through quota-share agreements with medium retention

d.

Through excess of loss covers with high retention

Discuss
Answer: (b).Through facultative placements with low retention Explanation:Most of the reinsurance cover for aviation and special types of liability business is placed through facultative placements with low retention.
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