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 17 of 24

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Q161.
What is the most frequent method of cover in engineering reinsurance?

a.

Combined quota share and surplus

b.

Surplus

c.

Working "risk" excess of loss treaty

d.

Facultative excess of loss

Discuss
Answer: (b).Surplus Explanation:The most frequent method of cover in engineering reinsurance is the surplus.
Q162.
What is the main reason that the problems for the reinsurer get more complicated in respect of large complex projects?

a.

EAR/CAR covers being for periods longer than a year

b.

Possibility to review the terms of policy at mid-term

c.

Shortage of reinsurance capacity

d.

None of the above

Discuss
Answer: (a).EAR/CAR covers being for periods longer than a year Explanation:The problems for the reinsurer get more complicated in respect of large complex projects due to the EAR/CAR covers being for periods longer than a year and with no possibility to review the terms of policy at mid-term.
Q163.
Which of the following are considered as exposure for total loss?

a.

Hot testing and commissioning phase of projects

b.

Advance Loss of Profit

c.

DSU

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The Advance Loss of Profit / DSU are considered as exposure for total loss [100% PML] and the hot testing and commissioning phase of projects at the end of many years of construction and erection bring with them enhanced exposures.
Q164.
Which is the most frequent method of cover in Engineering reinsurance?

a.

Surplus

b.

Quota Share

c.

Combined quota share and surplus

d.

None of the above

Discuss
Answer: (a).Surplus Explanation:The most frequent method of cover in Engineering reinsurance is the surplus. However, and especially for insurers which do not yet have a great deal of experience, combined quota share and surplus may be used.
Q165.
What does the reinsurer reserve the right to do in certain cases?

a.

Approve the terms before the policies are issued

b.

Reject the policies issued by the insurer

c.

Settle claims on its own without consulting the insurer

d.

None of the above

Discuss
Answer: (a).Approve the terms before the policies are issued Explanation:In certain cases the reinsurer reserves the right to approve the terms before the policies are issued and the treaty thus becomes “obligatory/facultative”.
Q166.
What is the clause inserted by the reinsurer in the agreement to take part in the settlements of claims?

a.

“The reinsurer shall settle claims within the conditions of the original policies and within the terms of this treaty, or effected by compromise agreement, shall be binding upon the reinsurer.”

b.

“The reinsurer shall settle claims within the conditions of the original policies and within the terms of this treaty, or effected by compromise agreement, shall be binding upon the insurer.”

c.

“The insurer shall settle claims within the conditions of the original policies and within the terms of this treaty, or effected by compromise agreement, shall be binding upon the reinsurer.”

d.

“The insurer shall settle claims within the conditions of the original policies and within the terms of this treaty, or effected by compromise agreement."

Discuss
Answer: (a).“The reinsurer shall settle claims within the conditions of the original policies and within the terms of this treaty, or effected by compromise agreement, shall be binding upon the reinsurer.” Explanation:This clause is inserted by the reinsurer in the agreement to take part in the settlements of claims. It states that the insurer shall settle claims within the conditions of the original policies and within the terms of the treaty. Any compromise agreement made by the insurer shall be binding upon the reinsurer. However, the insurer is responsible for settling or refusing a claim as if it were entirely for its own account and unreinsured. When a claim is likely to exceed the amount specified in the Special Conditions, consultation with the reinsurer must commence immediately.
Q167.
What is Industrial All Risks reinsurance?

a.

A cover for fire & perils only

b.

A cover for business interruption and burglary exposures only

c.

A combination of fire & perils, and breakdown perils

d.

A cover for high exposure risks like Petrochemicals or Explosives

Discuss
Answer: (c).A combination of fire & perils, and breakdown perils Explanation:Industrial All Risks reinsurance is a combination of fire & perils, and breakdown perils; at times including business interruption and burglary exposures.
Q168.
What is the restriction in treaty capacity for Industrial All Risks reinsurance involving high exposure risks?

a.

The treaty capacity remains the same

b.

The treaty capacity is increased

c.

The treaty capacity is restricted to moderate amounts

d.

The treaty capacity is restricted to large amounts

Discuss
Answer: (c).The treaty capacity is restricted to moderate amounts Explanation:If risks with high exposure to loss like Petrochemicals or Explosives etc. are involved, the treaty capacity would be restricted to moderate amounts and a major portion of the risks will have to be facultatively reinsured.
Q169.
What type of risks are covered under All risks property package reinsurance?

a.

Multi-risk exposures from different lines of insurance for small values

b.

Single-risk exposures for large values

c.

Multi-risk exposures from different lines of insurance for very large values

d.

Physical damage exposures on all real and personal property of the insured used in connection with his overall business

Discuss
Answer: (c).Multi-risk exposures from different lines of insurance for very large values Explanation:All risks property package reinsurance covers multi-risk exposures from different lines of insurance for very large values. Such “All Risks” Packages often include Marine /Off-shore /Liability & Business Interruption risk exposures in addition to the physical damage exposures on all real and personal property of the insured used in connection with his overall business which includes a range of diverse activities.
Q170.
How does the geographical territory basis operate in All risks property package reinsurance?

a.

It operates on a fixed location basis

b.

It operates on a selective location basis

c.

It operates on a fixed geographical basis

d.

It operates on a selective geographical territory basis

Discuss
Answer: (d).It operates on a selective geographical territory basis Explanation:The cover operates on a selective geographical territory basis rather than on a fixed location basis.
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