Q1. In ________business, a mix of risks producing a broad-based premium and giving a good treaty balance, yielding fairly sustained positive results over a period of time is needed
a) A reciprocal business
b) Risk booked business
c) Non risk booked business
d) Medium size business
Q2. In an excess form of reinsurance, the top and drop method is not relevant in which of the following case?
a) When There Is More Than One Layer
b) When The No. And Amount Of Reinstatement Is Restricted
c) When There Is Single Reinsurer
d) None of these
Q3. In the case of _______, all business exchanged with the insurer or reinsurer is summarized in a sheet, showing cessions on one side and matching acceptances on the other side
a) Reinsurance Arrangement
b) Reciprocal Exchange
c) Retrocession Arrangement
d) Cancellation Of Reinsurance Agreement
Q4. What is known as "cash loss request"?
a) If any individual loss exceeds an agreed sum, the ceding insurer may request for immediate settlement of loss by the reinsurer for his share
b) If any individual loss exceeds an agreed sum, the reinsurer may request for immediate settlement of loss by the insurer for his share
c) If any individual loss exceeds an agreed sum, the ceding insurer may request for immediate settlement of loss by the government for his share
d) If any individual loss exceeds an agreed sum, the reinsurer may request for immediate settlement of loss by the broker for his share
Q5. Which of the following is a benefit derived from reciprocal trading?
a) It enables the reinsurer to add to his net premiums and net profits
b) It provides a wider spread for the net retained portfolio of the reinsurer lowered losses, thus ensuring greater stability in surplus
c) It enables the ceding insurer to add to his net premiums and net profits
d) It provides a wide spread for the net retained profits/income of the reinsurer with improved performance
Q6. Which of the following key areas are looked into by the credit rating agencies?
a) The regulatory framework, industry analysis, business and product profile and selling and distribution system
b) The regulatory framework, literacy analysis, business and product profile and selling and distribution system
c) The regulatory framework, information technology analysis, business and product profile and selling and distribution system
d) The regulatory framework, chemical analysis, business and product profile and selling and distribution system
Q7. Which of the option is true regarding “Retention”?
a) It is an application of a contractual clause included in many insurance policies
b) The purpose of the retention clause is to specify what portion of damages will need to be paid by the policyholder
c) Retention is a combination of the financial consequences of risk and event-based losses
d) All I, II and III
Q8. Why would insurers wish to go in for reinsurance business than for direct business to supplement their growth?
a) Due to renovations or economic prosperity in various countries
b) Due to statutory regulations or economic prosperity in various countries
c) Due to politics or economic prosperity in various countries
d) Due to statutory regulations or economic depression in various countries
Q9. ABC Ltd. wants you to design a sentence which would describe a feature of ICRA.
a) It is a well-known credit rating agency in Africa
b) It is a well-known credit rating agency in U.S.A
c) It is a well-known credit rating agency in India
d) It is a well-known credit rating agency in Australia
Q10. For treaties on a three-year average basis the results of the current and two previous years are taken. If this is profitable how is the profit commission payable?
a) At the rate applicable on 1/8 of this profit
b) At the rate applicable on 1/2 of this profit
c) At the rate applicable on 1/4 of this profit
d) At the rate applicable on 1/3 of this profit
Q11. How does retrocession stabilize reinsurer results?
a) By protecting reinsurers from catastrophic losses and accumulation of smaller losses
b) By protecting reinsurers from catastrophic losses and accumulation of smaller profits
c) By preventing reinsurers from accumulating profit
d) By protecting reinsurers from larger losses only
Q12. MNP Ltd. a reinsurer wants to know more about the set-off clause in a reinsurance agreement. Explain.
a) This clause allows the broker and reinsurer to set off dues to each other
b) This clause permits each party to net amounts due against those payable after making payment
c) This clause permits each party to net amounts due against those payable before making payment
d) This clause allows the reinsured and reinsurer to set off dues to each other
Q13. Why might the size of claims in reinsurance be rising?
a) Administrative problems of the reinsurer
b) Normal delay in claims reporting
c) Increasing sums insured, increasing court awards, and inflation
d) Catastrophic events
Q14. What is one of the potential drawbacks of long-term investments for insurers?
a) Lower interest rates
b) High liquidity risk
c) Illiquid assets
d) Premature closure
Q15. What does PML stand for in the context of property insurance?
a) Property Management Level
b) Probable Maximum Loss
c) Premium Margin Limit
d) Policy Management Limit
Q16. What type of cover derives its premium from a limited number of risks in reinsurance?
a) First layer of catastrophe cover
b) Second surplus treaty
c) Auto/Fac cover
d) Facultative cover
Q17. How are retentions typically scaled down in marine-cargo reinsurance?
a) By type of cargo
b) By the age and size of the vessels
c) By the number of reporting offices
d) By the geographic distribution of risks
Q18. What is the primary concern for a marine cargo insurer when considering reinsurance?
a) Inland transit by rail or road
b) Individual policy amounts
c) Accumulation of risks per voyage
d) Rate of premium
Q19. What approach is sometimes followed when cargo treaties don't consistently generate profits?
a) Exclusion of cargo surplus treaties
b) Bouquet approach
c) Placing all cargo treaties with a single reinsurer
d) Focusing on increasing premiums
Q20. What is the consideration for a reinsurance contract?
a) The treaty wording
b) The ceding insurer's liability
c) The reinsurance premium
d) The subject matter of the insurance
