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 20 of 24

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Q191.
Why does a marine underwriter depend on good faith on the part of others?

a.

Because he never sees the ships and cargoes he insures

b.

Because the number of different types of ship and of cargo is too high

c.

Because the items to be insured are exposed to varied perils

d.

Because he needs to be misled or even defrauded

Discuss
Answer: (a).Because he never sees the ships and cargoes he insures Explanation:A marine underwriter actually sees very few, if any, of the ships and cargoes that he insures, so he depends very much on good faith on the part of others.
Q192.
What are the two broad categories of hull insurance?

a.

Ocean-going vessels and local crafts

b.

Air transit and inland transit

c.

Bulk carriers and OBOS

d.

Barges and dredgers

Discuss
Answer: (a).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.
Q193.
What is the accumulation of risk in marine cargo insurance?

a.

Several consignments are carried in the same vessel

b.

Consignments are carried by more than one vessel at the origin or destination ports

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:Policies for marine cargo insurance are for individually small amounts but since several consignments are carried in the same vessel, accumulation of liability is an important feature. Accumulation of risk can also occur for consignments carried by more than one vessel at the origin or destination ports.
Q194.
What is the insurer concerned with in reinsurance for marine cargo?

a.

Accumulation of risks per vessel

b.

Accumulation of risks per consignment

c.

Accumulation of risks per country

d.

Accumulation of risks per mode of transportation

Discuss
Answer: (a).Accumulation of risks per vessel Explanation:For reinsurance, an insurer is concerned with accumulation of risks per vessel. This implies that a voyage register should be maintained with one folio for every voyage and all commitments in respect of that voyage recorded thereon.
Q195.
Why is a breakdown of the premium by the age and size of the vessels carrying the cargo important?

a.

To determine the overall profitability of the insurer's marine cargo portfolio

b.

To assess the likelihood of a particular vessel being involved in a loss event

c.

To understand the distribution of risk across different vessels in the portfolio

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:A breakdown of the premium by the age and size of the vessels carrying the cargo is important for several reasons. Firstly, it helps to determine the overall profitability of the insurer's marine cargo portfolio. Secondly, it can be used to assess the likelihood of a particular vessel being involved in a loss event, which is important information for reinsurers. Finally, it can help to understand the distribution of risk across different vessels in the portfolio, which is important for both underwriters and reinsurers.
Q196.
What issue did cargo reinsurers face in regards to war risk cover in the last decade?

a.

They found that war risk cover was not important and did not need a separate rate

b.

They were unsure how to define one event in respect of war risk losses

c.

They found it difficult to establish and control accumulations for marine cargo reinsurance

d.

They became aware of substantial accumulations under war risk cover

Discuss
Answer: (d).They became aware of substantial accumulations under war risk cover Explanation:During the last decade cargo reinsurers became aware of the very substantial accumulations which can occur under war risk cover even in respect of localised hostilities, leading them to ask for a separate rate for the war risk premium under the excess of loss cover.
Q197.
What was the solution to the increased rates and reinstatement terms for war risk cover?

a.

Switching over to quota share reinsurance on war risk only

b.

Cancelling all war risk cover policies

c.

Increasing rates and reinstatement terms even more

d.

Adding war risk cover as a mere extension of the basic cover

Discuss
Answer: (a).Switching over to quota share reinsurance on war risk only Explanation:The increased rates and reinstatement terms were found uneconomic in most cases and it was found more advantageous to switch over to quota share reinsurance on war risk only.
Q198.
What is the fundamental difference between the way a marine surplus functions and the way a property surplus functions?

a.

Marine surplus reinsurances do not allow for selection against a reinsurer, while property surplus reinsurances do

b.

Property surplus reinsurances do not allow for selection against a reinsurer, while marine surplus reinsurances do

c.

Both marine and property surplus reinsurances allow for selection against a reinsurer

d.

Neither marine nor property surplus reinsurances allow for selection against a reinsurer

Discuss
Answer: (a).Marine surplus reinsurances do not allow for selection against a reinsurer, while property surplus reinsurances do Explanation:There is one fundamental difference in the manner in which a marine surplus functions and this must be noted. It was said for property reinsurances that if the risk ‘is not a very good risk the insurer may keep less than (Rs.x) and the amount to be reinsured will therefore increase’ in case of treaties without a line limitation. This selection against a reinsurer is not permitted in marine reinsurances. The ceding insurer on every occasion must keep a full retention before reinsuring.
Q199.
What is the significance of reinsurance in aviation insurance?

a.

Around 80% of any aircraft will be reinsured.

b.

Reinsurance is not necessary in aviation insurance.

c.

Only a small percentage of aviation risks are reinsured.

d.

Reinsurance is limited to a few countries in aviation insurance.

Discuss
Answer: (a).Around 80% of any aircraft will be reinsured. Explanation:Reinsurance plays a major part in aviation insurance as around 80% of any aircraft will be reinsured.
Q200.
What is the problem of accumulation of risk in aviation insurance?

a.

The risk of collision between two or more aircraft.

b.

Untried components or manufacturing processes in new aircraft.

c.

Insurance policies for airline hull and liability and aviation products liability.

d.

All of the above.

Discuss
Answer: (d).All of the above. Explanation:Accumulation of risk is a very real problem for the aviation insurer. This occurs in two ways: the risk of two or more aircraft being at the same place, and accumulations arising from insurance policies particularly those for airline hull and liability and aviation products liability.
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