IC85 REINSURANCE MANAGEMENT EXAM - 14

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Q1.What is the obligation of a reinsurer when the ceding insurer is in financial difficulties or is insolvent?
   a) Reinsurer shares commercial fate, hence reinsurer will have to pay his full share of the same loss
   b) Reinsurer shares insurance fate, hence reinsurer will have to pay his full share of the same loss
   c) Reinsurer shares insurance fate, hence reinsurer will not have to pay his full share of the same loss
   d) Reinsurer shares commercial fate, hence reinsurer will not have to pay his full share of the same loss
 
Q2.This method for reinsurance commission is very easy to account for, as the commission payable is determined by applying the agreed percentage of commission to the premium ceded loss returns and cancellation
   a) Sliding scale of commission
   b) Overriding commission
   c) Flat rate of commission
   d) All of the above
 
Q3.Which type of retention is managed through reasonable estimation of financial consequences and by allowing a catastrophe reserve for funds to accumulate and be available over the long term?
   a) Per risk retention
   b) Per events retention
   c) Financial retention
   d) Capital retention
 
Q4.The report which provides only for the totals is called
   a) Individual report.
   b) Bulk report
   c) Summary report.
   d) Bordereau
 
Q5. In a credit rating agency, Who among the following can take the decision regarding the change of the rating of an insurer?
   a) Credit Analyst
   b) Professional rating committee
   c) CEO
   d) Member of rating agency
 
Q6.In which of the following methods does the percentage of the retained sum insured vary for different limits of sum insured vary of different limits of sums insured and reduce with increase in the limit of sum insured?
   a) Proportional reinsurance
   b) Surplus Reinsurance
   c) Quota share reinsurance
   d) Variable quota share reinsurance
 
Q7.An arrangement in which insurer and reinsurer agree that cessions will always be a single fixed percentage of each reinsured risk can be referred to as
   a) per event excess of loss Re-insurance.
   b) per risk excess of loss Re-insurance.
   c) quota share Re-insurance.
   d) surplus Re-insurance.
 
Q8.Which of the following is/are true with regard to reinsurance underwriting?
   a) It involves selecting the accounts
   b) It involves defining conditions and rates
   c) Only (a) above
   d) (a) and (b) above
 
Q9.Which of the following is an example of a 'high risk' area due to the frequent occurrence of bush fires?
   a) The USA
   b) Europe
   c) Japan
   d) Australia
 
Q10.Facultative obligatory treaty is a form of reinsurance that is
   a) A combination of Facultative and; Treaty form.
   b) only a treaty form.
   c) facultative with some adjustment.
   d) None of the above.

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