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Certificate In Reinsurance Premium Access
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Question 1 of 30
1. Question
Insurance, in law and economics, is a method of risk control generally used to protect against the possibility of potential loss. Yet from the point of view of the creditor, this can be seen as:
Correct
From the perspective of the insurer, it can be viewed as a payment paid by the policyholders to the insurer in the form of a fee that can be refunded in the case of a default (a conditional setback).
Incorrect
From the perspective of the insurer, it can be viewed as a payment paid by the policyholders to the insurer in the form of a fee that can be refunded in the case of a default (a conditional setback).
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Question 2 of 30
2. Question
There are several empiric guidelines on the management of insurance premiums in lieu of reinsurance given below. Which of the following is an omission from the following statements with respect to the reinsurance?
Correct
Reinsurance is usually appropriate for minor purchases. Reinsurance, nevertheless, is usually not an inexpensive solution to hard capital or loans for very large transactions. In fact, as transactions are major, transaction costs may be minimized for retail activities because a large portion of their costs are fixed. In that case, stock issuing, debit or securitization is much more effective.
Incorrect
Reinsurance is usually appropriate for minor purchases. Reinsurance, nevertheless, is usually not an inexpensive solution to hard capital or loans for very large transactions. In fact, as transactions are major, transaction costs may be minimized for retail activities because a large portion of their costs are fixed. In that case, stock issuing, debit or securitization is much more effective.
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Question 3 of 30
3. Question
The principles of insurance and reassurance have originated in maritime commerce. Although the first maritime insurance was in the Antiquity, when and where was the first reassurance treaty formulated?
Correct
The first reassurance agreement was formed in Genoa in 1370. Sea merchants used to collect their ships to protect their investment: if the ship was to fail, the merchant was not killed, any merchant paying a small portion. But the insurance industry really grew during the Middle Ages, with a boom in trade.
Incorrect
The first reassurance agreement was formed in Genoa in 1370. Sea merchants used to collect their ships to protect their investment: if the ship was to fail, the merchant was not killed, any merchant paying a small portion. But the insurance industry really grew during the Middle Ages, with a boom in trade.
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Question 4 of 30
4. Question
Typically one divides the reinsurers into three categories, based on their type, origin, and location. Which of the following groups include Swiss Re, Munich Re, Hannover Re, and Berkshire Hathaway?
Correct
Big four: Western, predominantly European. The big four are coming together: Swiss Re, Munich Re, Hannover Re, and Berkshire Hathaway. Syndicates: first of all, Lloyd’s of London, which is not a corporation, is actually a syndicate. Bermuda: mainly small specialized reinsurers based in Bermuda, for tax incentives. Gathers: Swiss Re, Munich Re, Hannover Re, and Berkshire Hathaway.
Incorrect
Big four: Western, predominantly European. The big four are coming together: Swiss Re, Munich Re, Hannover Re, and Berkshire Hathaway. Syndicates: first of all, Lloyd’s of London, which is not a corporation, is actually a syndicate. Bermuda: mainly small specialized reinsurers based in Bermuda, for tax incentives. Gathers: Swiss Re, Munich Re, Hannover Re, and Berkshire Hathaway.
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Question 5 of 30
5. Question
Which of the following categories of reinsurers does have an infused life-and non-life-reinsurance equilibrium and their RoE averaged around 10%?
I. European Reinsurers
II. Lloyd’s Reinsurers
III. The syndicates
IV. Bermudian ReinsurersCorrect
European reinsurers have a mixed life and non-life balance Reassurance activity. RoE was within 10% on average. Lloyd’s is significantly smaller than Bermuda and European reinsurers, as determined by its capacity (GBP 23 bn relative to $90 bn and $60 bn of funding for European and Bermuda reinsurers, respectively). However, it is an important market, particularly for Reinsurance of specialization
Incorrect
European reinsurers have a mixed life and non-life balance Reassurance activity. RoE was within 10% on average. Lloyd’s is significantly smaller than Bermuda and European reinsurers, as determined by its capacity (GBP 23 bn relative to $90 bn and $60 bn of funding for European and Bermuda reinsurers, respectively). However, it is an important market, particularly for Reinsurance of specialization
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Question 6 of 30
6. Question
On 7 June 2005, the European Parliament voted to follow the Reinsurance Company Directive. Signed by the European Council on 16 November 2007, Directive 2005/68 / EC is now in effect. It is the first time that there has been a regulatory oversight of the reinsurance business at the European level. What is the Directive planning to do?
I. Enact fiduciary guidelines that are similar to those applicable to insurers.
II. Facilitate solvency regulations which are not in accordance with the laws applicable to insurers.
III. Automatic identification of the fund of the reinsurers as qualifying properties.
IV. Do not accept the reassurance as a qualifying asset if it was not a collateralized investment.Correct
The Guideline aims to enforce prudential regulations in line with the laws applicable to insurers and to properly consider the fund of reinsurers as qualifying reserves. (This is a big change in France where the insurance law did not consider the reinsurance as a qualifying asset because it was not a collateralized asset).
Incorrect
The Guideline aims to enforce prudential regulations in line with the laws applicable to insurers and to properly consider the fund of reinsurers as qualifying reserves. (This is a big change in France where the insurance law did not consider the reinsurance as a qualifying asset because it was not a collateralized asset).
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Question 7 of 30
7. Question
Reinsurers whose object, as it is said, is generally for mortgage-backed securities and whose technically no risk has been endorsed, are referred to as:
I. Captive
II. Small commercial insurer
III. Special Purpose reinsurer
IV. Single-purpose reinsurerCorrect
Special Purpose Reinsurer (SPR) are re-insurers for a particular intent, as it is said, typically for securitization and technically without risk support.
Incorrect
Special Purpose Reinsurer (SPR) are re-insurers for a particular intent, as it is said, typically for securitization and technically without risk support.
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Question 8 of 30
8. Question
Why is long-term faith the central bond between both the reinsurer and the insurer?
Correct
The ambiguity of the reinsurer ‘s premium requires the reinsurer to measure and evaluate the risk concisely: the underwriting of insurance against specific risks is analogous to the assessment of underwriting risks, but also of the efficiency of the teams that underwrite and handle claims. Often the reinsurer knows the risk better than the insurer, particularly for very specific risks. To such a degree, the reinsurer is regraded as an insider.
Incorrect
The ambiguity of the reinsurer ‘s premium requires the reinsurer to measure and evaluate the risk concisely: the underwriting of insurance against specific risks is analogous to the assessment of underwriting risks, but also of the efficiency of the teams that underwrite and handle claims. Often the reinsurer knows the risk better than the insurer, particularly for very specific risks. To such a degree, the reinsurer is regraded as an insider.
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Question 9 of 30
9. Question
Which of the following is conscious not only of financial risks, but is making an attempt to evaluate the particularities of the risk portfolio?
I. The investor
II. An outsider
III. The Securitizer
IV. The reinsurerCorrect
The reinsurer not only knows the business, but also takes an attempt on insurance risks and their analysis to assess the risk portfolio and is an expert. The insurer is liable to the insured.
Incorrect
The reinsurer not only knows the business, but also takes an attempt on insurance risks and their analysis to assess the risk portfolio and is an expert. The insurer is liable to the insured.
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Question 10 of 30
10. Question
An Insurance bought by insurers from underwriters to reduce the potential loss that the insurer may have suffered in the event of an catastrophic event is referred to as:
Correct
Reinsurance is insurance that is bought by insurers by reinsurers to mitigate the actual liability that the owner may have suffered in the case of a catastrophic incident, e.g. a natural catastrophe, resulting in a large number of covered assets becoming affected. Reinsurance enables insurance providers to pass the liability: part or more of the liability to the insured is borne by other firms in exchange for reimbursement of the premium.
Incorrect
Reinsurance is insurance that is bought by insurers by reinsurers to mitigate the actual liability that the owner may have suffered in the case of a catastrophic incident, e.g. a natural catastrophe, resulting in a large number of covered assets becoming affected. Reinsurance enables insurance providers to pass the liability: part or more of the liability to the insured is borne by other firms in exchange for reimbursement of the premium.
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Question 11 of 30
11. Question
Reinsurance would contribute to making the outcomes of an insurance policy more stable by:
I. Enhancing losses (either through terms of the relative loss or in terms of consistency).
II. Absorbing larger suffering (either in terms of loss size, or in terms of intensity).
III. Boosting the amount of capital required to provide media attention.
IV. Lowering the volume of resources needed to have coverage.Correct
Reinsurance could certainly make the outcomes of an insurance policy more stable by covering higher risks (either in terms of risk effect or frequency) and the the amount of money required to offer coverage.
Incorrect
Reinsurance could certainly make the outcomes of an insurance policy more stable by covering higher risks (either in terms of risk effect or frequency) and the the amount of money required to offer coverage.
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Question 12 of 30
12. Question
The contract in which the insurer, called the transferor or the transferor company, passes part of the liability to the reinsurer is called:
Correct
The agreement under which the insurer, called the transferor, transfers part of the liability to the reinsurer is called the reassurance convey. The assignment can be a whole or a section of a single risk, a specified strategy, or a given division of operation, as stated in the reinsurance contract.
Incorrect
The agreement under which the insurer, called the transferor, transfers part of the liability to the reinsurer is called the reassurance convey. The assignment can be a whole or a section of a single risk, a specified strategy, or a given division of operation, as stated in the reinsurance contract.
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Question 13 of 30
13. Question
Which of the following terminology is used for a contract where the reinsurer agrees to pay part of the liability already underwritten or agreed by the insurer?
Correct
A deal in which the reinsurer decides to pay half of the liability already insured, underwritten or approved, is considered recognition. Under this situation, the reinsurer passes all or half of the liabilities to another reinsurer, reassurance is termed retrocession.
Incorrect
A deal in which the reinsurer decides to pay half of the liability already insured, underwritten or approved, is considered recognition. Under this situation, the reinsurer passes all or half of the liabilities to another reinsurer, reassurance is termed retrocession.
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Question 14 of 30
14. Question
Which of the following form(s) of reinsurance is/are for a particular risk, the liability is divided by the insured and the reinsurer in accordance with the premium split by them?
I. Proportional reinsurance
II. Non-proportional reinsurance
III. Quota-share reinsurance
IV. Gross Claims reinsuranceCorrect
Proportional reinsurance (benefit transfer): with a particular risk, the liability is divided between the insured and the reinsurer in proportion to the premium difference between the insurers. In the regulator’s point of view, both flexibility and objectivity have made proportional reinsurance more attractive on a liquidity basis than non-proportional underwriting.
Incorrect
Proportional reinsurance (benefit transfer): with a particular risk, the liability is divided between the insured and the reinsurer in proportion to the premium difference between the insurers. In the regulator’s point of view, both flexibility and objectivity have made proportional reinsurance more attractive on a liquidity basis than non-proportional underwriting.
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Question 15 of 30
15. Question
A form of reinsurance that is commonly used to minimize severe and disaster risk is referred to as:
Correct
Non-proportional reinsurance (loss transfer): the reinsurer and the insurer determine how the insurer should act in the case of a loss and determine the resulting premium. Non-Proportional reinsurance is commonly used to minimize vulnerability to hazards and disasters.
Incorrect
Non-proportional reinsurance (loss transfer): the reinsurer and the insurer determine how the insurer should act in the case of a loss and determine the resulting premium. Non-Proportional reinsurance is commonly used to minimize vulnerability to hazards and disasters.
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Question 16 of 30
16. Question
The amount of reassurance that the insurer purchases equivalent to the overall loss on a single risk/event is referred to as:
I. Reinsurance Capacity
II. Underwriting capacity
III. Retention
IV. Co-ReinsuranceCorrect
Reinsurance Capacity: Reinsurance volume when an insured covers equivalent to the estimated loss on a single risk/event. The following formula is used for different risks:
Reinsurance Capacity = Capacity underwriting − RetentionIncorrect
Reinsurance Capacity: Reinsurance volume when an insured covers equivalent to the estimated loss on a single risk/event. The following formula is used for different risks:
Reinsurance Capacity = Capacity underwriting − Retention -
Question 17 of 30
17. Question
When a number of reinsurers (or insurers) share the risks of a reinsurance deal, it is termed as:
Correct
When many reinsurers (or insurers) share the risks of a reinsurance deal, they are called co-(Re)insurance. The deal owner, usually the central insurer with the largest stake, has a special role to play in agreeing terms and conditions with the transferee.
Incorrect
When many reinsurers (or insurers) share the risks of a reinsurance deal, they are called co-(Re)insurance. The deal owner, usually the central insurer with the largest stake, has a special role to play in agreeing terms and conditions with the transferee.
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Question 18 of 30
18. Question
Quota share reinsurance is the distribution of all activity in a fixed percentage (the transfer rate) or proportion. A distribution of 70 percent of the allocation will include:
I. 70 % of the share relinquished to the reinsurer.
II. 70 % of the share relinquished to the insurer.
III. The remaining 30% is held by the reinsurer.
IV. The remaining 30% is held by the insurer.Correct
A 70 percent pool allocation will entail a 70 percent allocation allocated to the reinsurer, with the remaining 30 percent held by the insurer. The priorities and goals of the insurer, as well as the amount of proportionate resources available on the reinsurance market at the time of placement, will decide the percentage that the insurer will hold on its own account.
Incorrect
A 70 percent pool allocation will entail a 70 percent allocation allocated to the reinsurer, with the remaining 30 percent held by the insurer. The priorities and goals of the insurer, as well as the amount of proportionate resources available on the reinsurance market at the time of placement, will decide the percentage that the insurer will hold on its own account.
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Question 19 of 30
19. Question
Quota sharing deals are usually binding arrangements. Different coverage or types of companies can be exempt under the terms of the contract. Which of the following risks could be exempted from the liability Quota-shares?
I. Tunnel-making risks
II. Pharmaceutical risks
III. Oil extraction risks
IV. Large bridges formation dangersCorrect
Different coverage or types of company can be exempt under the terms of the contract. It can not be passed to the re-insurer without proper examination and consent (usually referred to as specific acceptance) by the re-insurer. For example, tunnels and large bridges are exempt from the QuotaShare Classical Property or from the possibility of pharmaceutical and oil production from the Quota-share liability.
Incorrect
Different coverage or types of company can be exempt under the terms of the contract. It can not be passed to the re-insurer without proper examination and consent (usually referred to as specific acceptance) by the re-insurer. For example, tunnels and large bridges are exempt from the QuotaShare Classical Property or from the possibility of pharmaceutical and oil production from the Quota-share liability.
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Question 20 of 30
20. Question
The reinsurer premium is essentially the proportionate share of the insurer ‘s initial premium on all company ceded. From an accounting standpoint, the Reinsurance Commission is known as:
Correct
The reinsurer requires the client to award or control commission compensation on any gross premium earned, which is big enough to compensate the client for the fee paid to its employees, plus taxes and overheads. The size of the fee also dictates the income or loss of the reinsurer. From an accounting perspective, the commission is known to be a form of expense.
Incorrect
The reinsurer requires the client to award or control commission compensation on any gross premium earned, which is big enough to compensate the client for the fee paid to its employees, plus taxes and overheads. The size of the fee also dictates the income or loss of the reinsurer. From an accounting perspective, the commission is known to be a form of expense.
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Question 21 of 30
21. Question
Reinsurance requiring the transmission of the insurer and the reinsurer to recognize an aspect of any risk that exceeds the default retention limit of the insurer shall be referred to as:
Correct
Surplus Treaty: a re-insurance that allows the insurer to move and the re-insurer to take part of the liability that meets the initial protection cap of the insurer. The reinsurer invests in premiums and losses in the same amount as it invests in the overall insurance risk limits.
Incorrect
Surplus Treaty: a re-insurance that allows the insurer to move and the re-insurer to take part of the liability that meets the initial protection cap of the insurer. The reinsurer invests in premiums and losses in the same amount as it invests in the overall insurance risk limits.
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Question 22 of 30
22. Question
Capacity is usually expressed as a set of lines, with the insurer retaining one line as maintenance. In reality, retention can vary by form or file, the lines becoming wider where the danger is clear. Therefore, the “two-line” surplus sharing protocol allows for the reassurance for:
Correct
The ‘two-line’ excess sharing policy calls for the reassurance of double the reinsured’s remaining exposure, enabling the re-insured to pay three times as much insurance as was feasible before the reassurance.
Incorrect
The ‘two-line’ excess sharing policy calls for the reassurance of double the reinsured’s remaining exposure, enabling the re-insured to pay three times as much insurance as was feasible before the reassurance.
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Question 23 of 30
23. Question
Usually, what is the maximum amount of surpluses in the reinsurance system, beyond which the potential will increase?
Correct
Typically, there is an average of 3 surpluses in the reinsurance system, the potential of which is growing. The explanation for such a cap is to reduce operating costs of handling further surpluses for small interest (analog is a polygonal representation of three points of a scale, here a distribution percentage for a particular reinsurance).
Incorrect
Typically, there is an average of 3 surpluses in the reinsurance system, the potential of which is growing. The explanation for such a cap is to reduce operating costs of handling further surpluses for small interest (analog is a polygonal representation of three points of a scale, here a distribution percentage for a particular reinsurance).
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Question 24 of 30
24. Question
In the case of non-proportional reinsurance, as the term suggests, there is no equal distribution of premiums, costs, and profits. Which of the following claims points are the conditions / work correctly stated under the non-proportional reinsurance scheme?
I. An example of a non-proportional reassurance is the pool share reassurance that is the distribution of all companies in a fixed ratio.
II. It protects insurers from big damages, catastrophic incidents, such as natural disasters.
III. We may consider non-proportional reinsurance as protection for the insurer.
IV. The reinsurer assumes responsibility only for damages which extend the term of the contract, in exchange for payment of the premium agreed by the insurer and the reinsurer.Correct
The reinsurer accepts responsibility only for damages that exceed the term of the contract, in exchange for reimbursement of the premium agreed by the insurer and the reinsurer, without any clear relation to the premium paid by the insurer. Practically, we should treat non-proportional reinsurance as protection for the insurer.
Incorrect
The reinsurer accepts responsibility only for damages which exceed the term of the contract, in exchange for reimbursement of the premium agreed by the insurer and the reinsurer, without any clear relation to the premium paid by the insurer. Practically, we should treat non-proportional reinsurance as protection for the insurer.
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Question 25 of 30
25. Question
From the examples/sub-types of the proportional and non-proportional reinsurance, which of the following are examples of Proportional reinsurance?
I. Reinsurance capacity
II. Quota-share
III. Per Risk Excess of Loss reinsurance
IV. Surplus treatiesCorrect
Quota-share method of reassurance was the first form of proportional reassurance and is still commonly used. The Surplus Agreement is a Reinsurance which allows the insurer to move and the reinsurer to assume a portion of any liability that reaches the default retention cap of the insurer.
Incorrect
Quota-share method of reassurance was the first form of proportional reassurance and is still commonly used. The Surplus Agreement is a Reinsurance which allows the insurer to move and the reinsurer to assume a portion of any liability that reaches the default retention cap of the insurer.
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Question 26 of 30
26. Question
Which of the following is the right formula to measure the Reinsurance Capacity?
Correct
Reinsurance Capacity: Reinsurance volume when an insurer pays equivalent to the overall loss on a single risk/event. For different risks:
Reinsurance Capacity = Capacity underwriting − RetentionIncorrect
Reinsurance Capacity: Reinsurance volume when an insurer pays equivalent to the overall loss on a single risk/event. For different risks:
Reinsurance Capacity = Capacity underwriting − Retention -
Question 27 of 30
27. Question
Non-proportional reinsurance protects insurers against major damages, severe incidents, such as natural disasters (storms, floods, earthquakes, etc.). In this situation, the reinsurer must pay a percentage of the damages in excess of the limit, sometimes referred to as:
Correct
In this situation, the reinsurer must pay a percentage of the damages in excess of the limit, often referred to as the holding. In addition, we distinguish non-proportional reinsurance on the grounds of the estimation of the risks to be added to the reinsurance treaty.
Incorrect
In this situation, the reinsurer must pay a percentage of the damages in excess of the limit, often referred to as the holding. In addition, we distinguish non-proportional reinsurance on the grounds of the estimation of the risks to be added to the reinsurance treaty.
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Question 28 of 30
28. Question
In the context of non-proportional reinsurance, what kind of loss is the impairment that compares to the damage suffered by the insurer in a different portfolio even in the same catastrophic case (one earthquake, for example)?
Correct
For Event / Cat Risk Excess: the loss refers to the damage suffered by the insured in a different account even in the same catastrophe event. This vulnerability is related to the existence of an incident (natural or non-natural) involving a variety of threats considered to be non-independent. Under any case, the reinsurer is exposed to an expected escalation of lawsuits.
Incorrect
For Event / Cat Risk Excess: the loss refers to the damage suffered by the insured in a different account even in the same catastrophe event. This vulnerability is related to the existence of an incident (natural or non-natural) involving a variety of threats considered to be non-independent. Under any case, the reinsurer is exposed to an expected escalation of lawsuits.
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Question 29 of 30
29. Question
In principle, we distinguish non-proportional reinsurance on the basis of the estimate of the damage to be attributed under the Reinsurance Treaty. Which of the following statements correctly describes the “Stop Loss”?
I. The loss corresponds to one policy for the insurer.
II. The loss refers to the loss suffered by the insured on a different account even in the case of the same tragedy.
III. The loss applies to damages sustained by the insured on a common claim over a period of time ( usually one year).
IV. The loss refers to the gains by the insured on a different account even in the case of the same tragedy.Correct
Stop Loss: the loss refers to the loss suffered by the insured on a similar account over a span of time (usually one year). The reinsurer must pay a portion of the damages in excess of the limit, often referred to as maintenance.
Incorrect
Stop Loss: the loss refers to the loss suffered by the insured on a similar account over a span of time (usually one year). The reinsurer must pay a portion of the damages in excess of the limit, often referred to as maintenance.
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Question 30 of 30
30. Question
A Risk XL treaty 5 XL 3 means :
I. XL capacity: 5 – 3 = 2M
II. XL attachment point : 3 M
III. XL limit: 5 M
IV. XL capacity: 3 + 5 = 8 MCorrect
We note an Excess of Loss, b X a with: a = XL attachment point or retention, b = XL limit and a + b = limit or capacity
XL attachement point : 3 M, XL limit : 5 M and XL capacity: 3 + 5 = 8 MIncorrect
We note an Excess of Loss, b X a with: a = XL attachment point or retention, b = XL limit and a + b = limit or capacity
XL attachement point : 3 M, XL limit : 5 M and XL capacity: 3 + 5 = 8 M