IC85 REINSURANCE MANAGEMENT EXAM - 06
| Q1.A Reinsurer Decides The Retention Based On The Following. |
| Technical Formulas |
| Rules |
| Experience |
| Calculation |
| Q2.ABC Ltd. claims that the operative clause allows defining the exact business which comes within the scope of the reinsurance contract. |
| No, I do not agree since the termination clause will allow this |
| No, I do not agree |
| No, I do not agree since PML excess clause will allow this |
| Yes, I agree |
| Q3.Analyze the following statement: I. IN THEORY: When both Portfolio and degree of balance grow, the retention increases and accepts fluctuation II. IN PRACTICE: The growth of the Portfolio is more than the growth of retention, resulting in retention and seeking diminution in fluctuation. |
| Both I and II are True |
| Both I and II are False |
| Only I is True |
| Only II is True |
| Q4.Categorize ''Sovereign rating'' appropriately. |
| It is the rating of the particular government in the country |
| It is the rating of a particular government body |
| It is the rating of a particular regulator |
| It is a country's overall rating |
| Q5.Choose a true statement with regards to Per Risk Retention: - i) It is related to the number of individual risks that could be hit by multiple events. ii) It can be managed through controlled and informed decisions. iii) It is managed only through reasonable estimation of financial consequences |
| Only (i) |
| Only (ii) |
| Only (iii) |
| All of these |
| Q6.Find out the statement whether true/false I. If the retention limit is too low, they cede too large a part of the premium income to their insurers. ii. If the retention limit is too high, they expose themselves to retaining more when claims occur. |
| Both I and II are true |
| Both I and II are False |
| I am True and II is False |
| II is True and I is False |
| Q7.Given below, one of the objectives of reinsurance is false. Find out |
| Should not allow stabilizing any fluctuation in insurers annual claim experience |
| Should reduce the company’s probability of “ruin” |
| Should allow an insurer to accept risks beyond its normal retention |
| B & c are false |
| Q8.If management sets a high retention limit then |
| They may find they are too large a part of their premium income to their reinsurer |
| They may find they are ceding too small a part of their premium income to their reinsurers |
| They expose themselves to retaining more when claims occur |
| They expose themselves to retaining less when claims occur |
| Q9.In a Reinsurance company who is responsible for the acceptance of business and the profits made? |
| agents |
| brokers |
| underwriters |
| regulators |
| Q10.In program design, new types of cover are acceptable only when |
| Covers may be devised and issued for new developments |
| Covers arising due to changes in science and technology |
| Covers with new exposures that can be easily accommodated within the program |
| All the above |