IC85 - Reinsurance Management Exam - 4

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Q 1. In the context of a reinsurance agreement, what is the purpose of the "Loss occurrence" clause about riots, civil commotions, and malicious damage?

To specify the deductible for each loss

To define the maximum limit of liability for the reinsurer

To establish the area limitation for such losses

To determine the duration and extent of a "loss occurrence"

To outline the procedure for adjusting losses

Q 2. What is the primary condition precedent for the reinsured's liability to pay under the "Claims Cooperation Clause"?

The submission of regular claims reports to the reinsurer

The approval of claims by a court of law

The provision of advance payments by the reinsurer

The reinsured's immediate notification to the lead reinsurer of potential claims

The reinsured's appointment of a legal representative

Q 3. Which copy of the treaty reinsurance agreement is typically forwarded to the Stamp Office for stamping in India?

The ceding insurer's copy

The broker's copy

Both copies were received from foreign ceding companies

The reinsurer's copy

The original document

Q 4. In Fire and Accident Proportional Reinsurance, what are the premiums typically shown?

Original gross rates

Underwriting Year basis

Non-Proportional Reinsurance

Overriding commission

Agency commission

Q 5. What is the primary purpose of profit commission in reinsurance?

To reimburse the reinsurer's expenses

To calculate the overriding commission

To incentivize ceding insurers to produce profitable business

To reduce the original commission

To set the upper and lower limits for commission rates

Q 6. What method is typically followed when a treaty is canceled to allow the cessations to run to their natural expiry?

Portfolio transfer method

Clean cut method

Natural expiry method

Commission method

Renewal method

Q 7. How is the minimum and deposit premium typically divided for payment by the reinsured?

It is paid as a lump sum at the beginning of the year

It is paid in quarterly installments

It is subject to deductions for losses

It is based on the reinsured's profit commission

It is adjusted based on the reinsurer's reserve releases

Q 8. What is the primary aim of converging Indian accounting standards with International Financial Reporting Standards (IFRS)?

To increase reinsurance premiums

To create multiple reports for multinational companies

To make accounting standards more stringent

To reduce compliance with local regulations

To enhance the ability to attract foreign capital

Q 9. What is an enlightened attitude of the fiscal authorities regarding a reinsurer's tax situation characterized by?

Imposing higher taxes

Allowing unlimited tax-free reserves

Reducing the reinsurer's profitability

Understanding the nature of reinsurance and allowing tax-free reserves

Refusing to collect taxes from reinsurers

Q 10. What impact has the consolidation of the insurance sector had on the demand for reinsurance?

Increased demand for annual, account-specific reinsurance

Decreased demand for all types of reinsurance

Increased reliance on alternative risk financing programs

Reduced numbers of insurers and reinsurers

Reduced need for corporate value and objectives

Q 11. What is the primary reason for Bermuda's emergence as a major international insurance and reinsurance hub?

Strict regulations

Tax incentives

Access to the primary insurance market

Operational freedoms

Low demand for insurance services

Q 12. What is the primary method of settlement for transactions at Lloyd's using new technology?

Manual settlements

Weekly settlements

Electronic Data Interchange (EDI)

Paper-based settlements

Accreditation settlements

Q 13. What is the primary objective of GIC Re's strategy to target inward overseas reinsurance premiums?

To dominate the European reinsurance market

To reduce its presence in developed markets like Europe and the United States

To provide reinsurance services exclusively to Middle Eastern countries

To establish a presence in the Middle East, Soviet block, and Far East markets

To become a direct insurer in Asian and African regions

Q 14. In what way can managing reinsurance security based on risk-taking leverage profits for an insurer or reinsurer?

By avoiding all credit risks

By focusing solely on market ratings

By reducing investments on the balance sheet

By offsetting higher reinsurance credit risk with lower risk in other assets

By consistently relying on sovereign ratings

Q 15. What does a credit rating specifically not address for insurers and reinsurers?

Their ability to meet non-policy obligations (debt)

Their investment portfolio diversity

Their market share

Their regulatory compliance

Their customer service quality



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