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 23 of 24

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Q221.
What is accumulation in insurance?

a.

When several people are affected by a loss there is an accumulation of insured persons

b.

When several policies arranged in respect of one and the same individual are affected

c.

When a single policy is arranged for an individual

d.

Both a and b

Discuss
Answer: (d).Both a and b Explanation:Accumulation is when several people are affected by a loss there is an accumulation of insured persons; also, where several policies arranged in respect of one and the same individual are affected, one speaks of a ‘policy accumulation’.
Q222.
Why is accumulation control essential in insurance?

a.

To determine need for reinsuring

b.

To increase premiums for policyholders

c.

To reduce the number of insured persons

d.

To limit the liability of the insurer

Discuss
Answer: (a).To determine need for reinsuring Explanation:Accumulation control is essential to determine need for reinsuring.
Q223.
Standard Fire and special peril insurance is a principal class of _____________

a.

Property reinsurance

b.

Liability reinsurance

c.

Marine insurance

d.

Aviation insurance

Discuss
Answer: (a).Property reinsurance Explanation:Standard Fire and Special Peril Insurance covers damage or loss to property resulting from perils such as fire, lightning, explosion, storm, flood, and other similar events. It is a type of property insurance that provides protection against damage or loss to a property, including its contents, due to various perils. Property reinsurance is a principal class of insurance that deals with insuring property, and Standard Fire and Special Peril Insurance falls under this category. Liability reinsurance, marine insurance, and aviation insurance deal with different types of risks and perils, and are not related to Standard Fire and Special Peril Insurance.
Q224.
What is the purpose of setting retention limits by management of an insurer?

a.

To increase solvency risk

b.

To decrease solvency risk

c.

To minimize reinsurance

d.

To maximize reinsurance

Discuss
Answer: (b).To decrease solvency risk Explanation:The purpose of setting retention limits by management of an insurer is to set limits they can afford to risk their solvency.
Q225.
Who approves the retention limits set out by the management of an insurer?

a.

Underwriter

b.

Reinsurer

c.

Shareholders

d.

Management

Discuss
Answer: (d).Management Explanation:The retention limits are set out by the management and approved by them.
Q226.
Are there any formulas or rules that enable an insurer or a reinsurer to decide on their retention?

a.

Yes

b.

No

c.

May be Yes or No

d.

Can't say

Discuss
Answer: (b).No Explanation:There are no clearly defined formulas or rules that enable an insurer or a reinsurer to decide on their retention.
Q227.
What is retention in practice a combination of?

a.

Rating, liquidity, and return

b.

Per risk retention and per event retention

c.

Financial consequences of risk and event-based losses

d.

Catastrophe reserve and reinsurance

Discuss
Answer: (c).Financial consequences of risk and event-based losses Explanation:Retention in practice is a combination of the financial consequences of risk and event-based losses.
Q228.
What are the two types of retention required to be managed?

a.

Per risk retention and catastrophe reserve

b.

Per event retention and liquidity reserve

c.

Catastrophe reserve and financial reserve

d.

Per risk retention and per event retention

Discuss
Answer: (d).Per risk retention and per event retention Explanation:The two types of retention required to be managed are per risk retention and per event retention.
Q229.
How is the per risk retention scaled down?

a.

According to the quality of risks

b.

According to the quantity of risks

c.

According to the country where the risks are located

d.

According to the type of risks

Discuss
Answer: (a).According to the quality of risks Explanation:The per risk retention is scaled down according to the quality of risks.
Q230.
How is the per event retention managed?

a.

Through reinsurance

b.

Through reasonable estimation of financial consequences and catastrophe reserve

c.

Through investment in high-risk ventures

d.

Through increasing premiums

Discuss
Answer: (b).Through reasonable estimation of financial consequences and catastrophe reserve Explanation:The per event retention is managed through reasonable estimation of financial consequences and through causing a catastrophe reserve for funds to accumulate and be available over the long term.
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