IC85 - Reinsurance Management Exam - 2

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Q 1. In a reinsurance agreement, when are outstanding losses typically advised to the reinsurer?

At the end of each accounting period

Only if requested by the reinsurer

On the anniversary date of the agreement

Upon the settlement of each loss

Outstanding losses are not advised to the reinsurer

Q 2. What is the time limitation typically associated with the "hour's clause" for certain perils?

24 consecutive hours

48 consecutive hours

72 consecutive hours

168 consecutive hours

1,000 consecutive hours

Q 3. What is the "Claims Cooperation Limit" in the "Claims Cooperation Clause"?

The maximum limit of the primary insurer's liability

The threshold for reporting claims to the reinsurer

The amount at which the reinsurer's participation begins

The minimum number of claims required for cooperation

The percentage of claims that the reinsurer is responsible for

Q 4. Under the Indian Stamps Act 1899, what is the timeframe for stamping an instrument executed out of India after it is received in India?

Within one week

Within two months

Within three months

Within six months

There is no specific timeframe for stamping instruments executed out of India.

Q 5. What is the basis for rendering accounts in Marine Proportional Reinsurance?

Accounts Year basis

Underwriting Year basis

Original gross rates

Overriding commission

Acquisition costs

Q 6. When is brokerage typically payable in reinsurance?

When a ceding insurer receives a share of a treaty via a broker

When a ceding insurer calculates profit commission

When a reinsurer receives business as an inward retrocession

When a ceding insurer produces profitable business

When a treaty agreement is on an underwriting year basis

Q 7. In the event of the actual payments for outstanding losses differing from the amount credited to the reinsurer at the commencement of reinsurance, what right does the ceding insurer have?

The right to increase the reinsurer's liability

The right to terminate the reinsurance agreement

The right to adjust the reinsurer's premium

The right to make appropriate adjustments

The right to charge additional commission

Q 8. What is the purpose of a minimum and deposit premium in reinsurance contracts?

To calculate the reinsurance commission

To secure the reinsurer's obligations

To provide additional profit to the ceding insurer

To cover claim expenses

To pay the broker's fee

Q 9. What is the primary function of financial statements in the insurance industry?

To calculate broker commissions

To track policyholder information

To estimate gross claims

To make provisions for revenue accounts

To monitor changes in exchange rates

Q 10. What is one of the methods used by reinsurers to ascertain the price of the cover they grant?

Deducting tax at the source

Calculating the gross premium rate first

Providing a net premium to the ceding insurer

Refusing to pay taxes

Outsourcing the pricing to a third-party

Q 11. What is one of the challenges of the traditional insurance insurer's capital structure?

Lack of permanent capital

Excessive reliance on reinsurance

Over-employment of capital in a soft market

The rapid disappearance of syndicates

Lean and flexible capital structure

Q 12. Which geographies have been encouraging offshore reinsurance by offering operational and tax freedoms to attract reinsurers?

Europe and North America

Bahrain and Dubai

Africa and South America

Hong Kong and Shanghai

Australia and New Zealand

Q 13. What do Lloyd's underwriters and brokers have to attain and comply with to operate within the Lloyd's market?

Professional qualifications and strict solvency norms

High annual revenue targets

Membership in multiple insurance organizations

Advanced degrees in finance and risk management

Low premium rates

Q 14. Why are reinsurers often referred to as "the bankers to the insurance industry"?

Because they focus on making profits for their shareholders

Because they primarily provide insurance coverage to individuals

Because they operate more as a means of finance than just risk transfer

Because they have unlimited liability in their operations

Because they primarily target overseas reinsurance premium

Q 15. Why might an insurer or reinsurer perceive a higher credit risk associated with reinsurance recoverable compared to industry standards?

Industry standards often overstate credit risk.

Reinsurance recoverable are typically low-risk

Industry standards understate credit risk

Credit risk is unrelated to reinsurance

The industry does not have established credit standards


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