IC85 REINSURANCE MANAGEMENT EXAM - 11
| Q1.The credit rating is used by insurers and reinsurers to inform the |
| Assessment of balance sheets |
| Financial Strength |
| Results of each Reinsurance Transactions |
| Non-repayment of Principal and interest |
| Q2.The primary objective of reinsurance is that it should reduce the insurer's probability of “ruin” at a price acceptable to it. In what context is the word “ruin” used by an actuary? |
| Loss |
| Bankruptcy |
| Deficit |
| Debit |
| Q3.Under excess of loss if the cover is Rs. 10 crores in excess of 5 crores, then the 5 crores are known as___. |
| Cover Limit |
| Deductible |
| Franchise |
| Ultimate Net Loss |
| Q4.What is the disadvantage of switching reinsurance markets? |
| By switching markets, one secures the goodwill and reserves built up with an existing set of reinsurers |
| By switching markets, one gains lots of exposure |
| By switching markets, one loses his profit |
| By switching markets, one loses the goodwill and reserves built up with an existing set of reinsurers |
| Q5.When is a transaction considered as a financing mechanism and is booked as a loan or liability instead of an asset? |
| If there is insufficient risk transfer the transaction is considered a financing mechanism and is booked as a loan or liability instead of an asset |
| If there are insufficient funds the transaction is considered a financing mechanism and is booked as a loan or liability instead of an asset |
| If there is insufficient time the transaction is considered a financing mechanism and is booked as a loan or liability instead of an asset |
| If there is insufficient commission transfer the transaction is considered a financing mechanism and is booked as a loan or liability instead of an asset |
| Q6.Which method is mostly used in the case of property proportional treaties? |
| 75% Method |
| Clean Cut Method |
| 50% Method |
| One Fifth Method |
| Q7.Which of the following are correct regards to catastrophic cover? |
| it protects the insurer against known accumulations arising out of one event. |
| at least one risk to be involved in a single loss before the excess of loss is affected |
| the retention is normally more than the amount retained under each individual risk |
| the retention is normally less than the amount retained under each individual risk. |
| Q8.Which of the following reinsurance commission method is used to calculate the rate of commission based on the loss ratio of the treaty during any one treaty year or during any one underwriting year? |
| Flat rate of commission |
| Sliding scale of commission |
| Overriding commission |
| Profit commission |
| Q9.Which one is the key operation aspect of a treaty document? |
| Follow-on insurance |
| Line |
| Method of cession |
| All of these |
| Q10.Who is a Captive? |
| Captive is a shareholder created and wholly-owned by its sponsors to provide a facility to aggregate, insure and reinsure only their risks |
| Captive is a reinsurer created and wholly-owned by its sponsors to provide a facility to aggregate, insure and reinsure only their risks |
| Captive is a broker created and wholly-owned by its sponsors to provide a facility to aggregate, insure and reinsure only their risks |
| Captive is an insurer created and wholly-owned by its sponsors to provide a facility to aggregate, insure and reinsure their risks |