IC85 - Reinsurance Management Exam - 3

Discover More Mock Tests Here


Q 1. Why was marine reinsurance forbidden in British legislation for a certain period?

To encourage insurers to handle all risks themselves

To reduce the cost of marine insurance

To promote the development of reinsurance companies

To protect the interests of reinsurers

To prevent insolvency or death of insurers
 
Q 2. What must each insurer in India do to structure their annual reinsurance program in compliance with regulations and solvency requirements?

Seek approval from the General Insurance Corporation of India (GIC)

Get approval from the Ministry of Finance

Obtain an insurance license from IRDA

Notify the Insurance Regulatory & Development Authority (IRDA)

Seek approval from the Reserve Bank of India
 
Q 3. How does reinsurance help insurers stabilize their profitability?

By reducing the insurer's ability to compete for business

Limiting the insurer's flexibility in accepting various types of risks

By spreading overheads over a smaller volume of business

By increasing the insurer's ability to compete for business

By increasing the expense ratio
 
Q 4. What is the primary purpose of facultative reinsurance?

To automatically cover all risks falling within the scope of the agreement

To obtain retrocession from the reinsurer

To stabilize administrative costs

To provide reinsurance coverage before accepting a specific risk

To protect reinsurer results
 
Q 5. Why is the quota share method usually adopted for short-term specialized requirements rather than as a long-term arrangement?

It is more profitable for the reinsurer.

It allows the ceding insurer to retain more premiums.

It avoids the selection against the reinsurer.

It is a more flexible method for long-term arrangements.

It is less costly for the ceding insurer.
 
Q 6. In reinsurance, why would a quota share treaty typically allow for a higher ceding commission compared to a surplus treaty?

Quota-share treaties are more common, leading to higher commissions.

Quota share treaties have lower risk exposure.

Surplus treaties are more profitable.

Quota share treaties involve a higher percentage of reinsurance premiums.

Surplus treaties are negotiated with smaller insurers.
 
Q 7. What is the term for a list detailing the risks ceded to a surplus treaty?

Bordereaux

Quota Share

Reinsurance Premium

Treaty Commencement

Gross Line
 
Q 8. In the provided example, if the reinsurer's limit of coverage for the first layer is Rs. 25,00,000, and the reinsured retains Rs. 5,00,000, what would be the maximum liability of the reinsurer?

Rs. 30,00,000

Rs. 1,00,00,000

Rs. 25,00,000

Rs. 20,00,000

Rs. 5,00,000
 
Q 9. What does "I.B.N.R." stand for in the context of the claims information provided?

International Business Negotiation Record

Immediate Benefit Notice for Reinsurers

Incurred But Not Reported

Internal Billing and Notification Requirement

Inherent Business Net Revenue
 
Q 10. On the "losses occurring" basis, how are losses covered within the contract period determined?

Only losses from policies issued during the contract period are covered

All losses occurring within the contract period are covered, regardless of when the original policy was issued

Only losses occurring before the inception date of the contract are covered

Only losses occurring after the contract termination date are covered

The contract covers losses based on the insurer's awareness of claims at the date of termination
 
Q 11. What is the aim of determining the degree of acceptable fluctuation in an insurer's portfolio?

To eliminate all fluctuations

To maximize reinsurance

To reduce reinsurance costs

To maintain the same level of fluctuation

To limit fluctuations to an acceptable degree
 
Q 12. What is the primary objective of a schedule of retentions in property insurance?

To minimize premiums

To standardize policy issuance

To control exposure per risk

To maximize shareholder returns

To eliminate claims entirely
 
Q 13. Why are reinsurers growing increasingly concerned about catastrophe covers in reinsurance?

They rarely share the fortunes of the ceding insurer on such covers

They are always profitable on catastrophe covers

The ceding insurer's profit is well secured on such covers

They can easily reinstate their provisions

The ceding insurer compels them to support the covers
 
Q 14. What is an important factor in the analysis of the gross portfolio for fixing retention in marine - Cargo reinsurance?

The insurer's corporate objectives

The level of regulatory control

The number of reporting offices

The history of claims

The geographic distribution of risks
 
Q 15. What is the significance of accumulation control in life reassurance?

To limit the number of life insurance policies

To increase reinsurance protection

To reduce the need for surplus treaties

To avoid business debts

To determine the need for reinsurance in cases of policy accumulation



Discover More Mock Tests Here