REINSURANCE

1. What is the primary purpose of reinsurance?

• To increase the insurer’s exposure to risk

• To reduce the insurer's financial stability

• To manage and reduce the insurer's risk exposure

• To reduce the number of policies an insurer can issue

Which type of reinsurance involves a pre-arranged agreement covering a broad range of risks?

• Facultative Reinsurance

• Treaty Reinsurance

• Catastrophe Reinsurance

• Primary Insurance

What does facultative reinsurance involve?

• Automatic acceptance of all policies

• Selective reinsurance on a case-by-case basis

• Coverage for specific geographic regions only

Which of the following is an example of excess of loss reinsurance?

• Reinsurer covers all risks automatically

• Reinsurer covers losses

• Reinsurer covers a fixed percentage of all claims

What is a ceding insurer?

• The company that accepts risks from reinsurers

• The company that issues policies to policyholders

• The insurer that transfers risk to a reinsurer

Reinsurance is the process where one insurance company transfers part of its risk to another insurance company.

• TRUE

• FALSE

Facultative reinsurance applies to a specific, individual risk or policy.

• TRUE

• FALSE

Treaty reinsurance automatically covers a specific, individual risk negotiated between the ceding company and reinsurer.

• TRUE

• FALSE

Non-proportional reinsurance covers all losses from the insurance company’s portfolio.

• TRUE

• FALSE

If an insurance company receives RM1,000,000 in premiums and has a reinsurance agreement where the reinsurer takes 30% of the premiums, how much will the reinsurer receive?

• RM300,000

• RM30,000

• RM70,0000