IC85 Mock Test Sample 7
Reinsurance agreements help insurers manage large and complex risks through structured treaties and alternative risk transfer methods. Concepts like surplus treaties, reciprocal trading, and follow-the-fortunes clauses ensure continuity, balanced portfolios, and fair risk sharing. Financial reinsurance and captives support long-term profitability and capital management. Clauses such as attachment of cessions and alterations define coverage application and contract modifications. Bordereaux maintain transparency in reinsured risks. Pools and extranet systems improve coordination among insurers and clients. Overall, reinsurance law is based on contract principles and aims to reduce fluctuation, stabilize portfolios, and strengthen insurer solvency.
Q1. What may be waived in second surplus treaty placement?
a) Comprehensive information
b) Reasonable balance
c) Bordereaux request
d) Acceptance by reinsurers
Q2. Why obtain good spread in reciprocal trading?
a) Increase profit
b) Simplify process
c) Larger shares
d) Relationship continuity
Q3. What caused agreement reconstitution after 9/11?
a) War declaration
b) Lenders’ pressure
c) Regulation change
d) Lack of terrorism cover
Q4. Purpose of “Business Covered” clause?
a) Payment currency
b) Claim settlement
c) Excluded risks
d) Attachment point
Q5. Which is NOT a feature of ART products?
a) Multiyear cover
b) Multiple lines
c) Single event cover
d) Multiple factors
Q6. Who checks underwriter qualification compliance?
a) Broker
b) Regulator
c) Doctor
d) Engineer
Q7. Technique used by life insurers for stable returns?
a) Infinite risk
b) Risk exposure
c) Financial reinsurance
d) Contingent capital
Q8. Eligible recoverable loss under XOL treaty?
a) Ground up loss
b) Re-claim loss
c) Unrecoverable loss
d) Ultimate net loss
Q9. Group providing large insurance capacity is called?
a) Self-insurance
b) Risk retention group
c) Pool
d) Captive
Q10. Customer access extension of intranet is?
a) Internet
b) Intranet
c) Extranet
d) WWW
Q11. Rating status when future action possible?
a) Developing
b) Developed
c) Constructed
d) None
Q12. Captives are categorized as?
a) Only USA
b) Global since 1950s
c) Only UK
d) Since 17th century
Q13. Bordereaux includes?
a) Only class
b) Only amount
c) Only territory
d) Both class & amount
Q14. Loading on pure burning cost usually?
a) 90–95%
b) 45–65%
c) 25–30%
d) 35–45%
Q15. Program design involves?
a) Only I
b) Both II & III
c) Only III
d) Both I & III
Q16. Treaty reinsurance signing rule?
a) By ceding insurer
b) By reinsured
c) By/on behalf of parties
d) By broker
Q17. Reinsurance law is based on?
a) Morals
b) Good faith
c) Contracts
d) Profit
Q18. Clause allowing amendments?
a) Access to records
b) Alterations
c) Errors & omissions
d) Arbitration
Q19. Larger ______ means lower fluctuation.
a) Risk
b) Loss
c) Portfolio
d) Retention
Q20. Follow the fortunes covers?
a) Technical risks
b) Contractual risks
c) Both
d) None
