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 8 of 24

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Q71.
What is the purpose of a well-drawn schedule of retentions?

a.

To determine the total net commitment within an area

b.

To protect the insurer from catastrophe hazards

c.

To retain fully a large proportion of simple and commercial risks

d.

To ascertain the PML

Discuss
Answer: (c).To retain fully a large proportion of simple and commercial risks Explanation:A well-drawn schedule of retentions is designed to give the anticipated loss exposure and help the insurer retain fully a large proportion of simple and commercial risks.
Q72.
Why is catastrophe cover protection needed?

a.

To determine the retention

b.

To monitor the total commitment zone-wise

c.

To protect the net account from catastrophe hazards

d.

To discontinue the exercise of risk-booking

Discuss
Answer: (c).To protect the net account from catastrophe hazards Explanation:Catastrophe cover protection is needed to protect the net account from catastrophe hazards that cannot be ignored in designing the protection for the net account.
Q73.
What is the problem with determining accumulation of risk?

a.

The difficulty in ascertaining the PML

b.

The administrative effort of ascertaining the total net commitment within an area

c.

The difficulty in demarcating the area which can be considered as exposed to one event

d.

The difficulty in determining the aggregate sum insured retention per conflagration area or catastrophe peril exposure zone

Discuss
Answer: (c).The difficulty in demarcating the area which can be considered as exposed to one event Explanation:The problem with determining accumulation of risk is the difficulty in demarcating the area which can be considered as exposed to one event.
Q74.
How is the problem of accumulation of risk in conflagration areas solved?

a.

By quota share reinsurance on policies

b.

By working excess of loss cover

c.

Both a and b

d.

By keeping a share of the first surplus treaty for the net account

Discuss
Answer: (c).Both a and b Explanation:The problem of accumulation of risk in conflagration areas is solved by either quota share reinsurance on policies or working excess of loss cover or both, depending on the circumstances of the case.
Q75.
How do insurers augment their retention?

a.

By keeping a share of the first surplus treaty for the net account

b.

By determining the retention

c.

By monitoring the total commitment zone-wise

d.

By drawing up and monitoring their total commitment zone-wise

Discuss
Answer: (a).By keeping a share of the first surplus treaty for the net account Explanation:Insurers augment their retention by keeping a share of their first surplus treaty for the net account, which can be increased progressively until it is time to revise the schedule of retentions.
Q76.
What is the purpose of a catastrophe cover?

a.

To protect the net retained account

b.

To provide coverage for low excess policies

c.

To cover losses from commercial risks

d.

To increase an insurer's retention capacity

Discuss
Answer: (a).To protect the net retained account Explanation:The purpose of a catastrophe cover is to protect the net retained account.
Q77.
What is the problem with placing catastrophe covers without proper data?

a.

The reinsurer will offer a higher rate for the cover

b.

The insurer will be left guessing about the extent of cover necessary

c.

The catastrophe cover will be adequately rated

d.

The broker will not be able to secure the cover free of cost

Discuss
Answer: (b).The insurer will be left guessing about the extent of cover necessary Explanation:Placing catastrophe covers without proper data can leave the reinsurer guessing about the extent of cover necessary.
Q78.
What has made catastrophe covers progressively more exposed?

a.

Increased competition for business

b.

The use of low excess covers

c.

Inflation and increases in property values

d.

The use of working covers combined with catastrophe covers

Discuss
Answer: (c).Inflation and increases in property values Explanation:Inflation and increases in property values have made catastrophe covers progressively more exposed.
Q79.
Why are catastrophe covers normally split into layers?

a.

To provide marketing advantages

b.

To increase the insurer's retention capacity

c.

To provide coverage for commercial risks

d.

To make it easier for reinsurers to assess their exposures

Discuss
Answer: (a).To provide marketing advantages Explanation:Catastrophe covers are normally split into layers for marketing and rating advantages.
Q80.
Why are reinsurers growing more insistent on receiving underwriting data?

a.

To assess their exposures to catastrophe perils

b.

To provide coverage for low excess policies

c.

To increase an insurer's retention capacity

d.

To secure catastrophe cover free of cost

Discuss
Answer: (a).To assess their exposures to catastrophe perils Explanation:Reinsurers are growing more insistent on receiving underwriting data in order to assess their exposures to catastrophe perils.
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