IC85 REINSURANCE MANAGEMENT EXAM - 11

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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

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