IC85 M0ck Test Sample 6
Reinsurance enables insurers to manage risk, stabilize profits, and maintain solvency by transferring portions of risk to reinsurers. Key concepts include retention limits, catastrophe protection, and treaty structures like quota share and excess of loss. Tools such as IBNR and loss-occurring basis help in claims estimation and coverage clarity. Marine and property insurance require specialized approaches due to diverse risks. Regulatory compliance, accumulation control, and portfolio analysis guide reinsurance decisions. Competition among reinsurers ensures better pricing and terms. Overall, reinsurance supports insurers in handling large losses, maintaining financial strength, and improving underwriting capacity.
Q1. Maximum liability of reinsurer in first layer?
a) Rs. 30,00,000
b) Rs. 1,00,00,000
c) Rs. 25,00,000
d) Rs. 20,00,000
Q2. IBNR stands for?
a) International Business Record
b) Immediate Benefit Notice
c) Incurred But Not Reported
d) Internal Billing Requirement
Q3. Objective of schedule of retentions?
a) Minimize premium
b) Standardize policies
c) Control exposure
d) Maximize returns
Q4. Marine insurance is unique due to?
a) Specialist cover
b) High premium
c) Wide range of values
d) Claim frequency
Q5. Treaty wording is signed by?
a) Insured
b) Reinsured
c) Intermediary
d) Each party
Q6. Reinsurance contract commences?
a) 31 Dec
b) 1 Jan
c) Agreed date
d) Insurer’s choice
Q7. Marine reinsurance was forbidden to?
a) Encourage insurers
b) Reduce cost
c) Promote reinsurers
d) Prevent insolvency
Q8. Insurer must do for reinsurance program?
a) GIC approval
b) Finance ministry approval
c) IRDA license
d) Notify IRDA
Q9. Reinsurance stabilizes profit by?
a) Reducing competition
b) Limiting flexibility
c) Spreading risk
d) Increasing expenses
Q10. Purpose of facultative reinsurance?
a) Auto cover all risks
b) Retrocession
c) Reduce admin cost
d) Cover specific risk
Q11. Quota share used short-term because?
a) Profitable
b) Higher retention
c) Avoid selection
d) Flexible long-term
Q12. Higher ceding commission in quota share because?
a) Common method
b) Lower risk
c) Surplus profit
d) Higher premium share
Q13. Losses occurring basis covers?
a) Policy issued period
b) All losses in period
c) Before inception
d) After termination
Q14. Aim of acceptable fluctuation?
a) Eliminate
b) Maximize reinsurance
c) Reduce cost
d) Limit fluctuations
Q15. Concern about catastrophe cover?
a) Rare sharing
b) Always profit
c) Profit secured
d) Easy reinstatement
Q16. Marine cargo retention factor?
a) Corporate objective
b) Regulation
c) Offices
d) Claims history
Q17. Accumulation control in life reassurance?
a) Limit policies
b) Increase cover
c) Reduce treaties
d) Assess need
Q18. Per risk vs per event retention?
a) Formula based
b) Quality-based
c) Regulation-based
d) Individual vs catastrophe
Q19. Catastrophe impact on reinsurance?
a) Reduce XOL
b) Stable loss
c) Protect gross account
d) No impact
Q20. Competition in reinsurance?
a) With insurers
b) With brokers
c) Among reinsurers
d) Among intermediaries
