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 16 of 24

Discover more Topics under IC85 Reinsurance Management

Q151.
What is the main focus of Property Reinsurance?

a.

Coverage of physical loss or damage to real and personal property

b.

Coverage of life insurance

c.

Coverage of marine hull insurance

d.

None of the above

Discuss
Answer: (a).Coverage of physical loss or damage to real and personal property Explanation:Property reinsurance deals with physical loss or damage to real and personal property and the financial consequences arising as a result of such loss or damage.
Q152.
What are the principal classes of property insurance?

a.

Marine cargo insurance

b.

Life insurance

c.

Standard fire & special perils insurance, engineering insurance, theft & burglary insurance and property all risks packages

d.

Marine hull insurance

Discuss
Answer: (c).Standard fire & special perils insurance, engineering insurance, theft & burglary insurance and property all risks packages Explanation:The principal classes of property insurance are Standard fire & special perils insurance, engineering insurance, theft & burglary insurance and property all risks packages for high value / high exposure mega risks.
Q153.
What is the benefit of using proportional treaties in fire insurance business?

a.

Provides an effective means for stabilization of results for the portfolio

b.

Provides protection against natural perils

c.

Provides protection against a single large risk

d.

None of the above

Discuss
Answer: (a).Provides an effective means for stabilization of results for the portfolio Explanation:Proportional treaties provide an effective means for stabilization of result for the portfolio in fire insurance business.
Q154.
What is the primary objective of quota-share and surplus treaties in fire insurance?

a.

To iron out the variation in results that occur from year to year

b.

To protect against a single large risk

c.

To protect against accumulation losses from one event

d.

None of the above

Discuss
Answer: (a).To iron out the variation in results that occur from year to year Explanation:The primary objective of quota-share and surplus treaties is to iron out the variation in results that occur from year to year in fire insurance.
Q155.
What is the purpose of setting up a table of limits?

a.

To evaluate the types of risks underwritten and the hazard in their locations

b.

To provide protection against natural perils

c.

To provide protection against a single large risk

d.

None of the above

Discuss
Answer: (a).To evaluate the types of risks underwritten and the hazard in their locations Explanation:The purpose of setting up a table of limits is to evaluate the types of risks underwritten and the hazard in their locations, and to set different retentions according to the degree of exposure to loss involved.
Q156.
Why is it necessary for an insurer to avail of excess of loss covers in fire insurance business?

a.

Fire insurance business is vulnerable to losses arising on a single large risk and to an abnormal increase in aggregate losses during a revenue year

b.

Fire insurance business is not vulnerable to losses arising on a single large risk

c.

Fire insurance business is not vulnerable to abnormal increase in aggregate losses during a revenue year

d.

None of the above

Discuss
Answer: (a).Fire insurance business is vulnerable to losses arising on a single large risk and to an abnormal increase in aggregate losses during a revenue year Explanation:Fire insurance business is vulnerable to losses arising on a single large risk, from natural perils, and to an abnormal increase in aggregate losses during a revenue year, so it is necessary for an insurer to avail of excess of loss covers to protect against these risks.
Q157.
What is the main problem in engineering reinsurance?

a.

Disproportion between the sums insured in different engineering lines

b.

Lack of capacity for highly exposed risks

c.

Inadequate policy conditions and rating principles

d.

Inability to review policy terms mid-term

Discuss
Answer: (a).Disproportion between the sums insured in different engineering lines Explanation:The main problem in engineering reinsurance is the disproportion which exists between the sums insured in the various engineering lines.
Q158.
Which types of insurance present a relatively balanced range of sums insured in engineering reinsurance?

a.

Machinery Breakdown, Contractors' Plant, and Computer insurances

b.

Erection All Risks and Contractors' All Risks

c.

Advance Loss of Profits and Delay in Start-up

d.

Hot testing and commissioning phase of projects

Discuss
Answer: (a).Machinery Breakdown, Contractors' Plant, and Computer insurances Explanation:"Machinery Breakdown", "Contractors' Plant", and "Computer" insurances present a relatively balanced range of sums insured in engineering reinsurance.
Q159.
What is the solution for insurers in engineering reinsurance to limit commitment on a single risk?

a.

Facultative excess of loss

b.

Working "risk" excess of loss treaty

c.

Catastrophe excess of loss cover

d.

Stop loss treaty

Discuss
Answer: (a).Facultative excess of loss Explanation:"Facultative excess of loss" is a solution for insurers in engineering reinsurance to limit commitment on a single risk.
Q160.
What is the exposure for total loss in engineering insurance for Advance Loss of Profit / Delay in Start-up?

a.

50% PML

b.

75% PML

c.

100% PML

d.

125% PML

Discuss
Answer: (c).100% PML Explanation:Advance Loss of Profit / DSU are considered as exposure for total loss [100% PML].
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