IC85 REINSURANCE MANAGEMENT EXAM - 16

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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

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