Reinsurance Arrangement Quiz

What is the primary function of reinsurance?

• To eliminate all risks

• To transfer risk to another insurer

• To increase the insurer's capacity

• To provide insurance to individuals

In a reinsurance arrangement, what is the insurer also known as?

• Primary insurer

• Retrocessionaire

• Reinsurer

• Ceding company

What does the term 'retention' refer to in reinsurance?

• The amount retained by the reinsurer

• The amount transferred to the reinsurer

• The total sum insured

• The amount retained by the primary insurer

In a surplus treaty, what is the first layer of reinsurance based on?

• Total sum insured

• Line surplus

• Retention limit

• Quota share

What type of reinsurance allows only the ceding company to decide whether to reinsure?

• Facultative reinsurance

• Semi-automatic proportional reinsurance

• Non-automatic proportional reinsurance

• Automatic proportional reinsurance

What does 'facultative' refer to in the context of reinsurance?

• A type of automatic reinsurance

• An optional arrangement between insurers

• A type of surplus treaty

• A mandatory arrangement

In the context of reinsurance, what does 'cedant' refer to?

• The primary insurer

• The reinsurer

• The retrocessionaire

• The insurance policyholder

What is the purpose of transferring risk to a reinsurer?

• To increase profits

• To share large losses

• To eliminate all risks

• To reduce premiums

What is the second layer of reinsurance in the combined quota share and surplus treaty based on?

• Quota share

• Retention limit

• Line surplus

• Total sum insured

What is the function of retrocession in reinsurance?

• To increase the insurer's capacity

• To eliminate all risks

• To transfer risk from reinsurer to another reinsurer

• To provide insurance to individuals