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 24 of 24

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Q231.
Which of the following is a normal method of reinsurance in miscellaneous accident business?

a.

Per risk basis

b.

Per event basis

c.

Excess of loss basis

d.

Surplus basis

Discuss
Answer: (d).Surplus basis Explanation:In miscellaneous accident business, surplus basis is a normal method of reinsurance. Surplus basis refers to the amount of insurance that is ceded to the reinsurer over and above the retention limit of the insurer. This method provides coverage for losses that exceed the insurer's retention limit. The reinsurer agrees to accept a portion of the surplus, which is the amount of insurance above the retention limit. The reinsurer is responsible for paying a share of any losses that occur within this surplus coverage.
Q232.
‘If the risk is not a very good risk the insurer may keep less and the amount to be reinsured will therefore increase in case of treaties without a line limitation.’ This is true for which of the following categories of reinsurance?

a.

Life reassurance

b.

Marine reinsurance

c.

Aviation reinsurance

d.

Property reinsurance

Discuss
Answer: (d).Property reinsurance Explanation:This statement refers to the concept of "surplus reinsurance" in property insurance, where the insurer retains a certain amount of risk and cedes the excess risk to the reinsurer. If the risk is considered less desirable, the insurer will retain less of the risk and cede more to the reinsurer. This is because the reinsurer will charge a higher premium for a riskier policy, and the insurer will want to limit their exposure to potential losses. This concept does not typically apply to life, marine, or aviation reinsurance.
Q233.
Which of the following types of insurance protects business debts of a firm which is dependent on a key individual for continuing its business?

a.

Property insurance

b.

Life assurance

c.

Keyman insurance

d.

Accident/Liability insurance

Discuss
Answer: (c).Keyman insurance Explanation:Keyman insurance is a type of insurance that is taken out by a company to protect itself against the financial loss that it may suffer in the event of the death or disability of a key employee or executive. This type of insurance is designed to protect the business debts of a firm which is dependent on a key individual for continuing its business. The sum insured in keyman insurance is not related to the value of a person but the value of his loss to his firm and the premium is paid by the firm as a business expense.
Q234.
Which of the following is correct with respect to per risk retention?

a.

Per Risk retention can be managed through controlled and informed decisions.

b.

The Per Risk retention is managed only through reasonable estimation of financial consequences.

c.

The Per Risk retention relates to the number of individual risks that could be hit by multiple events.

d.

The per risk retention is managed by allowing a catastrophe reserve for funds to accumulate and be available over the long term.

Discuss
Answer: (a).Per Risk retention can be managed through controlled and informed decisions. Explanation:Per Risk retention is the method used to determine the amount of risk that an insurer is willing to retain for a single policy or contract. The amount of retention may vary depending on the type of risk involved, and the insurer's overall risk appetite. However, the amount of retention can be managed through controlled and informed decisions, which include underwriting guidelines, risk assessment, and pricing strategies. By managing the Per Risk retention, insurers can effectively balance their risk exposure and profitability, while ensuring that they have sufficient resources to cover potential losses.
Q235.
Which type of retention is managed through reasonable estimation of financial consequences and by allowing a catastrophe reserve for funds to accumulate and be available over the long term?

a.

Per risk retention

b.

Per event retention

c.

Financial retention

d.

Capital retention

Discuss
Answer: (b).Per event retention Explanation: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. This type of retention is used to manage losses resulting from a catastrophic event, such as a natural disaster. It helps ensure that the insurer has sufficient funds to pay out claims resulting from such an event. In contrast, per risk retention is the retention amount set for each individual risk, which can be managed through controlled and informed decisions. Financial retention and capital retention are not commonly used industry terms.
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