IC85 REINSURANCE MANAGEMENT EXAM - 16
| Q1.Statement A: Disclosure of material facts operates only upto the time the contract is concluded but under a treaty, something more is required. Statement B: The principle of indemnity is an integral part of a reinsurance contract, even though the original contract may not have a pure indemnity. Which of the above statements is true? |
| a) Statement A |
| b) Statement B |
| c) Both the statements |
| d) None of the above. |
| Q2.Which of the following risks is beyond the control of the contractual parties under the Reinsurance contract? |
| a) Rate of Foreign Exchange |
| b) Inflation |
| c) Monetary Policy of countries of the contracting parties. |
| d) All of the above. |
| Q3.What are the main reasons for in demand for ART products? |
| a) Higher reinsurance prices driven primary by a shortage of capacity in the retrocession market |
| b) Increased fluctuations in the financial market |
| c) Exploitation of tax and regulatory asymmetries |
| d) For providing multi-year covers to the securitization of risk and derivatives |
| Q4.The function of Reinsurance is not. |
| a) To increase the capacity of the Insurer. |
| b) To facilitate the financial stability of the Insurer. |
| c) To facilitate the stabilization of the claim ratio. |
| d) To facilitate in accumulation of claims. |
| Q5.For which of the following reasons does direct-writing insurance companies start to write inward reinsurance business? |
| a) To increase payment of claim amount |
| b) To achieve a lower-income ratio by the maintenance of the volume of premium income |
| c) To obtain a better and widespread of business by writing business from overseas |
| d) To spend investment income, which is derived from cash flow resulting from inward acceptances |
| Q6.Which of the following clause is commonly found in all agreements and describes without any ambiguity the business coming within the scope of a reinsurance contract? |
| a) Operative clause |
| b) Downgrade clause |
| c) Commencecement and Termination clause |
| d) Sudden death clause |
| Q7.Which of the following is purposes of reinsurance? |
| a) To provide greater financial capacity to the primary insurer to assume more risks |
| b) To spread the risks over a larger number of insurers |
| c) To provide stability to results of the company by balancing good years with bad years |
| d) All of the above |
| Q8.Which of the following parties is/are required to build |
| a) The cedent. |
| b) The reinsurer. |
| c) The Broker. |
| d) Both (a) and (b) above |
| Q9.Self Insurance may not be advantageous in: |
| a) Predicting accurately. |
| b) Minimization of disputes. |
| c) Grouping of risks. |
| d) Saving transaction costs. |
| Q10.Re-insurers also may reinsure some of the loss exposures they assume under reinsurance contracts. Such a transaction is known as |
| a) Cession |
| b) Reinsurance portfolio |
| c) Retrocession |
| d) Pool arrangements |