REINSURANCE

1. Reinsurance is the insurance of the risk assumed by the –

a. Insurer
b. Reinsurer
c. Intermediary
d. Non of the above

2. The percentage of statutory cession GIC will receive from all Indian non-life insurers
on all classes business underwriting by them is-
a. 20%
b. 16%
c. 15%
d. 10%

3. Reinsurance is always a contract of-

a. Probable maximum loss
b. Normal maximum loss
c. Indemnity
d. Estimated maximum loss

4. The Manager of Motor Insurance Third Party pool is from:

a. IRDA
b. GIC
c. New India
d. United India

5. Every insurer shall file with the IRDA a photocopy of every insurance treaty slips and
cover notes of excess of loss cover in respect of that year, within
a. 30 days of the commencement of financial year
b. 60 days of the commencement of financial year
c. 90 days of the commencement of financial year
d. 15 days of the commencement of financial year

6. Because of the different laws and insurance practices prevailing the following
countries are usually excluded, where treaties are as a `world wide’ basis-
a. England and Ireland
b. German and France
c. United States of America and Canada
d. Malaysia and Mauritius

7 Indian regulations prescribe a minimum credit rating of ________ in respect of Re-

insurers outside India.

a. AAA
b. AA
c. BBB
d. BB

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8. The premium for an excess of loss treaty is usually expressed as a percentage of
a. The normal claim expected to occur.
b. The gross premium income written by the company for the class of business
c. The retention of the ceding company
d. The gross premium income written by the company for all classes of business
during the year of the treaty

9. What is the amount of claim is payable under facultative Re-insurance arrangement if

the total sum insured is 20,000,00 and the cover is for Rs. 5,000,00 and claim is Rs.
4,000,00.

a. 4,000,00
b. 3,000,00
c. 2,000,00
d. 1,000,00
a. are correct

10. For small accounts, where the extra administrative burden of a surplus would be too
great the treaty used mainly is
a. Surplus Treaty
b. Quota Share Treaty
c. Excess of Loss Treaty
d. Stop Loss Cover Treaty

11. This is a treaty where the amount reinsured is expressed as being between a
minimum and maximum quota share
a. Surplus treaty
b. Stop loss treaty
c. Variable quota share treaty
d. Stop loss care treaty

12. Under excess of loss if the cover is 10 crores in excess of 6 crores, then the 6 crores
is known as

a. Cover limit
b. Deductible
c. Franchises
d. Ultimate net loss

13. The total sum insured of a property risk is Rs. 10 crores and retention is Rs. One
crore the treaty limit is Rs. 5 crores. If there is a claim of Rs. 50 lakhs the Re-insurers will
pay under surplus treaty

a. Rs. 50 lakhs
b. Rs. 40 lakhs
c. Rs. 25 lakhs
d. Rs. 10 lakhs

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14. In India, the minimum entry capital for a Re-insurance company is

a .Rs. 50 crore
b. Rs. 100 crore
c. Rs. 200 crore
d. Rs. 300 crore

15. Absence of direct relationship between Re- insurer and insured is an essence of the
Re-insurance concept. Which of the following clause is against this concept?

a. Premium adjustment clause

b. Claims cooperation clause
c. Cut through clause
d. Follow the fortune clause

16. This method for reinsurance commission is very easy to account, as the commission
payable is determined by applying the agreed percentage of commission to the
premium ceded loss returns and cancellation
a. Sliding scale of commission
b. Overriding commission
c. Flat rate of commission
d. All of the above

17. When a reinsurer wishes to reduce its own liability on a particular risk, it does so by
arranging a

a. Cession.
b. Concession.
c. Retrocession.
d. Treaty.

18. The retention limit of the direct insurance is based upon

a. Capital
b. Risk profile of the portfolio
c. Regulatory considerations
d. All the above

19 “CESSION” is the terminology in reinsurance where

a. Amount of insurance an insurer transfers to reinsurer
b. Amount of insurance an insurer kept as retention
c. The limit of amount of insurance an insurer can write
d. Amount of insurance the reinsurer cedes to another insurer/reinsurer

20. ABC Insurance Co has a Risk XL Cover for a limit of Rs 90 Cr excess of Rs 10

Cr. The estimated GNPI is Rs 200 Cr. Adjustable rate is 2.50%. MNDP is 80%
payable in two instalments. The 1st instalment of MNDP will be

(a) Rs 2.50 Cr
(b) Rs 2.00 Cr

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 (c) Rs 4.00 Cr
(d) None of the above

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