IC85 Mock Test Sample 12
Reinsurance agreements contain several important clauses that define coverage, exclusions, amendments, and claims handling procedures. Clauses such as “Alterations by Mutual Consent,” “Loss Occurrence,” and “Operative Clause” help both insurers and reinsurers clearly understand their rights and obligations. Facultative reinsurance fills coverage gaps, while non-proportional treaties commonly use the “Ultimate Net Loss” clause. Tools like credit ratings and management information systems assist in evaluating inward reinsurance quality. Reinsurers also provide financial support, technical expertise, and risk distribution benefits. Regulatory frameworks such as FEMA 2000 govern overseas insurance transactions in India, ensuring proper foreign exchange management and compliance.
Q1. What is the purpose of an "Alterations: By mutual consent" clause in a reinsurance agreement?
a) To allow one party to make unilateral changes
b) To provide for automatic alterations in response to market changes
c) To require both parties to amend the agreement regularly
d) To outline the possibility of making amendments with the consent of both parties
Q2. What is the purpose of exclusions in a reinsurance agreement?
a) To specify the currencies in which reinsurance payments should be made
b) To outline the procedure for settling claims and losses
c) To describe the types of risks or losses excluded from the agreement
d) To define the attachment point at which reinsurance automatically applies
Q3. In reinsurance, what does the "Loss occurrence" clause allow the ceding insurer to do?
a) Set the deductible for each loss occurrence
b) Define the maximum liability of the reinsurer
c) Choose the commencement date of a loss occurrence
d) Determine the duration and extent of a loss occurrence
Q4. Which clause clearly describes the business covered within the scope of a reinsurance contract?
a) Operative Clause
b) Downgrade Clause
c) Commencement and Termination Clause
d) Sudden Death Claims
Q5. Which of the following tools helps determine quality in inward reinsurance business?
a) Management information system
b) Credit rating
c) Retrocession
d) Foreign exchange expertise
Q6. Which remains a basis of protection for gross reinsurance business?
a) Reinsurance cession
b) Reinsurance retention
c) Reinsurance program
d) Reinsurance design
Q7. __________ are agreements where two parties agree to a specified trade in future at a specified time.
a) Future & Forward
b) Present & Backward
c) Future & Backward
d) Past & Forward
Q8. __________ are agreements where one party retains the right to opt out of the trade.
a) Futures
b) Forwards
c) Options
d) Swaps
Q9. Which of the following is found only in non-proportional treaty agreements?
a) Accounts and Statistics Clause
b) Attachments of Lesions Clause
c) Follow The Fortune Clause
d) Ultimate Net Loss Clause
Q10. ABC Ltd. wants a feature of assessment of commitments. Which statement is appropriate?
a) Assessment should be state wise
b) Assessment should be zone wise
c) Assessment should be class wise
d) Assessment should be district wise
Q11. What term is used for a private internet arrangement connecting executives and offices internally?
a) Internet
b) Intranet
c) Extranet
d) World Wide Web
Q12. Choose the incorrect statement regarding advantages of reinsurance protection.
i) An insurer can accept old and tested risk exposures with reinsurance support
ii) The incidence of loss is widely distributed
a) Only (i)
b) Only (ii)
c) Both (i) & (ii)
d) None of these
Q13. Facultative reinsurance helps to fill voids in coverage. Do you justify this statement?
a) Yes
b) Depends on the nature of the policy
c) No
d) Depends on IRDA guidelines
Q14. GIC-Re is within the top _________ reinsurers of the world.
a) 5
b) 10
c) 15
d) 20
Q15. Identify the odd man out.
a) Policy to be signed by the reinsurer
b) Policy to be signed by insurance broker
c) Policy to be signed by or on behalf of each party
d) Policy to be signed by ceding insurer
Q16. In a program design stage, who are involved in achieving realism and synchronization with world reinsurance markets?
i) Professional reinsurer
ii) Agents and brokers
iii) Intermediaries
a) Only I
b) Both II and III
c) Only III
d) Both I and III
Q17. Which Act governs foreign exchange usage in overseas insurance and reinsurance transactions in India?
a) Insurance Act 1938
b) Companies Act 1956
c) Foreign Exchange Management Act 2000
d) Income Tax Act 1961
Q18. Judge the valid statements regarding reinsurers.
i) Reinsurers serve as a means of finance
ii) Reinsurers serve as a source of expert negotiability
iii) Reinsurers serve as a means of financial expertise
iv) Reinsurers serve as a source of effective broking
a) Only I
b) Both II and III
c) Only IV
d) Both IV and I
Q19. PQR Limited wants to categorize the concept of “portfolio of risk.” Help it.
a) It is one of the factors influencing retention
b) It is one of the factors never influencing retention
c) It is a risk which is always unavoidable
d) It is the risk borne by the insurer for reinsurance
Q20. Regarding technical objectives, which statement is true?
i) Concentration of risks in one class or area must be reduced
ii) Technical results need to be destabilized by reducing fluctuations
a) Only (i)
b) Only (ii)
c) Both (i) & (ii)
d) None of these
y
