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Certificate In Reinsurance Premium Access
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Question 1 of 30
1. Question
This method of representing the technical reserve clause was conventional in the:
Correct
This approach has become widespread in the French reinsurance industry (but not in other countries). Nonetheless, for the measurement of the solvency margin of the insurer, the French regulators accepted the role of the reinsurers in the technical reserves only if it had been obtained.
Incorrect
This approach has become widespread in the French reinsurance industry (but not in other countries). Nonetheless, for the measurement of the solvency margin of the insurer, the French regulators accepted the role of the reinsurers in the technical reserves only if it had been obtained.
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Question 2 of 30
2. Question
Which is the fundamental distinction between the Securitization provisions and those in conventional multi-year reinsurance contracts?
Correct
Securitization provisions are exactly the same as those found in conventional multi-year reinsurance contracts. The biggest distinction is the arrangement of the transaction that is made in order to secure creditors.
Incorrect
Securitization provisions are exactly the same as those found in conventional multi-year reinsurance contracts. The biggest distinction is the arrangement of the transaction that is made in order to secure creditors.
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Question 3 of 30
3. Question
The first important question is which agency is to grant a CAT bond. This person may be one of those who portray the character of an intermediary. It’s the:
I. The insurer
II. Transformer model
III. Agency model
IV. A reinsurerCorrect
Reinsurer (Transformer model): The reinsurer plays a key role as an intermediary. The downside is that the insurer checks the assets of the insurer, meaning that customers have more trust because the insurer is not well known. It’s even used where the insurer doesn’t want to reveal.
Incorrect
Reinsurer (Transformer model): The reinsurer plays a key role as an intermediary. The downside is that the insurer checks the assets of the insurer, meaning that customers have more trust because the insurer is not well known. It’s even used where the insurer doesn’t want to reveal.
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Question 4 of 30
4. Question
With regard to the legal framework of the CAT bond question, which of the specific contract mechanisms is used to reduce non-recourse credit risk to investors?
Correct
Most generally, bonds are sold on a non-recourse basis, including effective distinction. Nonetheless, in order to reduce collateral liability to creditors, a corporate corporation owned by the insurer (or the reinsurer) is formed solely for the purpose of offering a CAT bond. Thus, if the supporting company goes bankrupt, the connection is not impaired.
Incorrect
Most generally, bonds are sold on a non-recourse basis, including effective distinction. Nonetheless, in order to reduce collateral liability to creditors, a corporate corporation owned by the insurer (or the reinsurer) is formed solely for the purpose of offering a CAT bond. Thus, if the supporting company goes bankrupt, the connection is not impaired.
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Question 5 of 30
5. Question
The relationship of the counterparty with the asset is regarded as a reinsurance contract in the instance of:
I. A special-power insurance vehicle
II. A special purpose vehicle
III. A special-purpose reinsurance vehicle
IV. A reverse reinsurance vehicleCorrect
Usage of a Special Purpose Reinsurance Vehicle (SPRV) or a Special Purpose Vehicle (SPV): The distinction is that the counterparty contract with the insurer is regarded as a reassurance contract in the very first instance, while it is classified as a derivative contract throughout the second.
Incorrect
Usage of a Special Purpose Reinsurance Vehicle (SPRV) or a Special Purpose Vehicle (SPV): The distinction is that the counterparty contract with the insurer is regarded as a reassurance contract in the very first instance, while it is classified as a derivative contract throughout the second.
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Question 6 of 30
6. Question
From the aspects taken into account when setting up a vehicle, the one that entails higher legal expenses but allows more CAT bonds to be released is referred to as:
Correct
Application of a shelf program as opposed to a single-vehicle: The Shelf program entails higher compliance risks which allows for the issuing of other CAT bonds.
Incorrect
Application of a shelf program as opposed to a single-vehicle: The Shelf program entails higher compliance risks which allows for the issuing of other CAT bonds.
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Question 7 of 30
7. Question
Securitization provisions are generally the same as those found in conventional multi-year reinsurance contracts. What is the role of the modeling company in this context?
I. Based on the estimated loss, the model spread offered to investors would be different.
II. Calculate the estimated failure of the given sheet.
III. Calculate the estimated profits that are missing in the given sheet.
IV. Based on the estimated loss, the model spread offered to launderers would be similar.Correct
The third problem concerns the option of the modeling firm (EQE, RMS or AIR) to measure the estimated failure of the released sheet. Based on the estimated loss, the model spread offered to investors would be different.
Incorrect
The third problem concerns the option of the modeling firm (EQE, RMS or AIR) to measure the estimated failure of the released sheet. Based on the estimated loss, the model spread offered to investors would be different.
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Question 8 of 30
8. Question
When the contract is parametric, the simple risk will be relevant and the insurer would have to:
I. The price of the simple risk cover purchased would rely on the insurers selected to work with.
II. Purchase the basic risk plan.
III. The price of the simple risk cover purchased would rely on the software selected.
IV. Purchase the risk exposure plan.Correct
If the contract is parametric, the risk base will be relevant and the insurer will have to buy the risk base. The quality of this risk coverage basis would depend on the program selected.
Incorrect
If the contract is parametric, the risk base will be relevant and the insurer will have to buy the risk base. The quality of this risk coverage basis would depend on the program selected.
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Question 9 of 30
9. Question
The reputation of the business is significant, and a business that issues a CAT bond with too small yields will:
Correct
The identity of the business is significant, and a business that issues CAT bonds with too small spreads does not draw investors. The explanation that the ILS market has grown in recent years is primarily because buyers believe that they have a favorable risk range.
Incorrect
The identity of the business is significant, and a business that issues CAT bonds with too small spreads does not draw investors. The explanation that the ILS market has grown in recent years is primarily because buyers believe that they have a favorable risk range.
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Question 10 of 30
10. Question
Once a special vehicle is created, it appears to be seen if the issue of a CAT bond would be a public offering (listed security) or a private arrangement (restricted security). Share sales in the United States are intense because:
Correct
In the United States, stock offers are high due to the need for approval with the Securities and Exchange Commission (SEC) and a mechanism with filing. Law 144A was adopted with a view to entering US financial markets without requiring a public offering.
Incorrect
In the United States, stock offers are high due to the need for approval with the Securities and Exchange Commission (SEC) and a mechanism with filing. Law 144A was adopted with a view to entering US financial markets without requiring a public offering.
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Question 11 of 30
11. Question
The type of trigger is an integral point of mortgage-backed securities. The type of trigger used is essential for:
I. The insurance provider to mitigate the simple risk.
II. The insurance provider to raise the simple risk.
III. Investor who needs to improve accountability
IV. Investor who needs to improve the opaqueness of the procedure.Correct
The type of cause is a crucial point in collateralized debt obligations. The type of trigger is critical for an insurance provider that wants to mitigate simple risk. The simple risk refers to the risk that the insurer is not adequately covered. Investor who needs to improve accountability
Incorrect
The type of cause is a crucial point in collateralized debt obligations. The type of trigger is critical for an insurance provider that wants to mitigate simple risk. The simple risk refers to the risk that the insurer is not adequately covered. Investor who needs to improve accountability
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Question 12 of 30
12. Question
Considering the probable cause is an indemnity deal, if the layer stated in the cat bond is 100 million excess of 500 million and the cumulative claims amount to 580 million, the bond is triggered and the borrower receives:
Correct
The indemnity agreement is based on the real damages suffered by the lender. There is no specific risk to the insurer, although there is a clear chance of accountability for the lender. For eg, if the layer defined in the cat bond reaches EUR 100 million by more than EUR 500 million and the sum of the cumulative claims to EUR 580 million, the bond is triggered and the borrower earns EUR 80 million in recoveries.
Incorrect
The indemnity agreement is based on the real damages suffered by the lender. There is no specific risk to the insurer, although there is a clear chance of accountability for the lender. For eg, if the layer defined in the cat bond reaches EUR 100 million by more than EUR 500 million and the sum of the cumulative claim to EUR 580 million, the bond is triggered and the borrower earns EUR 80 million in recoveries.
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Question 13 of 30
13. Question
Instead of coping with the individual claims of the borrower, a risk portfolio is structured for use of a crisis model where the potential cause for securitization is:
I. A modeled loss transaction
II. An industry index transaction
III. A parametric transaction
IV. An indemnity transactionCorrect
A modeled loss transaction based on the predicted damage involved with the initiating event. Instead of dealing with the individual statements of the insurer, an injury plan is structured for the use of a disaster model.
Incorrect
A modeled loss transaction based on the predicted damage involved with the initiating event. Instead of dealing with the individual statements of the insurer, an injury plan is structured for the use of a disaster model.
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Question 14 of 30
14. Question
The securitization cause that is associated with the physical characteristics of incidents such as wind gusts (for windstorms) or intensity (for earthquakes) is referred to as:
Correct
Parametric transaction: the cause is related to the physical features of incidents, such as wind speed (for windstorms) or amplitude (for earthquakes). When an incident happens, the correct data for this parameter is gathered at various monitoring stations and then inserted into specified calculations that independently decide whether or not the bond is activated.
Incorrect
Parametric transaction: the cause is related to the physical features of incidents, such as wind speed (for windstorms) or amplitude (for earthquakes). When an incident happens, the correct data for this parameter is gathered at various monitoring stations and then inserted into specified calculations that independently decide whether or not the bond is activated.
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Question 15 of 30
15. Question
The industry index exchange is based on a market-wide loss index. Use the correct examples of this.
I. PERILS in the Europe
II. Property Claim Services (PCS) in the United States
III. PERILS in Europe
IV. Property Claim Services (PCS) in EuropeCorrect
An industry index exchange based on a market-wide loss index, e.g. Land Claim Services (PCS) in the USA and PERILS in America. The adjusted index, tailored to suit the company’s own book of transactions by weighting the outcomes of the index (for various jurisdictions and business units), is then used to decide whether or not the bond is triggered.
Incorrect
An industry index exchange based on a market-wide loss index, e.g. Land Claim Services (PCS) in the USA and PERILS in America. The adjusted index, tailored to suit the company’s own book of transactions by weighting the outcomes of the index (for various jurisdictions and business units), is then used to decide whether or not the bond is triggered.
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Question 16 of 30
16. Question
If the underlying risk is significant, the transferor may enter into a form of contract with a conventional reinsurer that offers protection against the underlying risk against the premium. This contract is called:
Correct
If the basic risk is significant, the transferor may enter into a basic risk arrangement with the conventional reinsurer, which will include a protection against the specific risk against the premium.
Incorrect
If the basic risk is significant, the transferor may enter into a basic risk arrangement with the conventional reinsurer, which will include a protection against the specific risk against the premium.
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Question 17 of 30
17. Question
The sort of trigger selected has a significant effect on the nature of the arrangement. In the case of a parametric arrangement, the regulator can more readily consider the:
I. Self-insuring vehicle
II. Shelf vehicle
III. Special purpose vehicle
IV. Special purpose reinsurance vehicle (SPRV)Correct
In the case of a parametric transaction, the regulator would understand the SPV more readily than the SPRV as the recoveries are not explicitly related to the real damages of the company due to a high chance.
Incorrect
In the case of a parametric transaction, the regulator would understand the SPV more readily than the SPRV as the recoveries are not explicitly related to the real damages of the company due to a high chance.
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Question 18 of 30
18. Question
The extension period is expected where there is a trigger occurrence at the end of the risk cycle to measure the recovery. For the case of an indemnity guarantee, it would take:
Correct
The extended duration is expected where there is a trigger occurrence at the end of the risk cycle in order to quantify the recovery. In the case of an indemnity bond, it will take a lot of time (usually several years) and in the case of a parametric bond it could take a few months.
Incorrect
The extended duration is expected where there is a trigger occurrence at the end of the risk cycle in order to quantify the recovery. In the case of an indemnity bond, it will take a lot of time (usually several years) and in the case of a parametric bond it could take a few months.
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Question 19 of 30
19. Question
The money is deposited in the Total Return Swap (TRS) to:
I. Transfer it to the investor.
II. Ensure the risk.
III. Transfer it to EURIBOR.
IV. Ensure the protection.Correct
The collateral is deposited in the Total Return Swap (TRS) in order to get back EURIBOR (plus or minus any bp based on the investment risk) and to insure the collateral (the cover provision states that if the collateral is less than a certain percentage of its original value, then the TRS provider must provide the difference).
Incorrect
The collateral is deposited in the Total Return Swap (TRS) in order to get back EURIBOR (plus or minus any bp based on the investment risk) and to insure the collateral (the cover provision states that if the collateral is less than a certain percentage of its original value, then the TRS provider must provide the difference).
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Question 20 of 30
20. Question
It will be necessary to develop stable collateral frameworks in the future. It should be done with:
I. Strong limitations on approved investment.
II. A daily target on the leverage market
III. Strong limitations on non-approved investment.
IV. A yearly target on the leverage market.Correct
It will be necessary to develop stable collateral frameworks in the future. That can be achieved with tight limits on approved transactions and a regular mark on the collateral market.
Incorrect
It will be necessary to develop stable collateral frameworks in the future. That can be achieved with tight limits on approved transactions and a regular mark on the collateral market.
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Question 21 of 30
21. Question
There are multiple pricing approaches for XS per risk sheet. Which one is utilizing previous knowledge to predict the future?
Correct
Historical Approach-Burning Cost: The process of burning expenses takes into account previous portfolio statements (over many years). Previous practice is being used to predict the future.
Incorrect
Historical Approach-Burning Cost: The process of burning expenses takes into account previous portfolio statements (over many years). Previous practice is being used to predict the future.
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Question 22 of 30
22. Question
Out of the three major pricing approaches for XS per risk sheet, which statements below characterize the essence of the Historical Approach-Extrapolation?
I. Non-probability pricing comprises of a frequency-severity model.
II. Probability pricing comprises of a frequency-severity model.
III. Reinsurance premium is determined by way of numerical formulae or directly by way of simulations.
IV. Historical arguments need to be established and put into an opposite order of the “quotation year.”Correct
Probability pricing consists of a frequency-severity model. In order to do so, it is important to establish historical arguments and to push towards the “quotation year.” Intensity and frequency may be measured until the data is reprocessed. Reinsurance premium is then determined by way of mathematical calculations or directly by way of simulations.
Incorrect
Probability pricing consists of a frequency-severity model. In order to do so, it is important to establish historical arguments and to push towards the “quotation year.” Intensity and frequency may be measured until the data is reprocessed. Reinsurance premium is then determined by way of mathematical calculations or directly by way of simulations.
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Question 23 of 30
23. Question
As regards the “formula” for pricing, the first move is to define and handle the data of the homogeneous risk groups separately. The re-insurer should not consider:
Correct
The first step is to define and handle the data of the homogeneous risk groups separately. The re-insurer does not use more than 10 years of history. It can sound insignificant, but after 10 years of experience, threats are usually not homogeneous because certain criteria have changed.
Incorrect
The first step is to define and handle the data of the homogeneous risk groups separately. The re-insurer does not use more than 10 years of history. It can sound insignificant, but after 10 years of experience, threats are usually not homogeneous because certain criteria have changed.
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Question 24 of 30
24. Question
When the threats have been broken up, they need to be analyzed and indexed. The first stage of the estimation results of the reprocessing of a set of historical statistics, in order to make it indicative of the underwriting conditions and economic circumstances of the year affected by the appraisal. Such a plan must consider:
I. The portfolio’s past claim (over 25 years).
II. Adjustments in the underwriting strategy (possible), risk management, portfolio structure.
III. (Possible) changes to the framework of reservation for long-tail business lines.
IV. Validation of covered numbers, complaints and premiumsCorrect
Such innovations will take into account: (possible) improvements in the underwriting strategy, risk management, portfolio composition; (possible) regulatory adjustments for long-tailed business lines; assessment of insurance numbers, claimants and premiums.
Incorrect
Such innovations will take into account: (possible) improvements in the underwriting strategy, risk management, portfolio composition; (possible) regulatory adjustments for long-tailed business lines; assessment of insurance numbers, claimants and premiums.
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Question 25 of 30
25. Question
In the case of non-proportional reinsurance, the price of a sheet is defined as the percentage of the premium base term. It’s because:
Correct
It is due to the fact that the premium base and therefore the risk is still not necessarily understood at the beginning of the year: the calculation of the insurance premium as a percentage of the premium base makes it easier to change the reinsurance rate at the end of the year.
Incorrect
It is due to the fact that the premium base and therefore the risk is still not necessarily understood at the beginning of the year: the calculation of the insurance premium as a percentage of the premium base makes it easier to change the reinsurance rate at the end of the year.
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Question 26 of 30
26. Question
In reassurance slips (a simplified version of the reassurance contract), it is common to refer to:
I. Debt Rates
II. Percentage of the losses
III. Percentage of the premium base
IV. Rates wordsCorrect
Reinsurance slips (a simplified form of the reassurance contract) are often referred to in terms of prices, in other words, as we stated earlier, as a proportion of the premium pool. Typically, the amount is given percent and often per thousand for the collateral layers.
Incorrect
Reinsurance slips (a simplified form of the reassurance contract) are often referred to in terms of prices, in other words, as we stated earlier, as a proportion of the premium pool. Typically, the amount is given percent and often per thousand for the collateral layers.
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Question 27 of 30
27. Question
The Exposure Rating approach is to apply the normal loss function (called the exposure curve) to portfolio risk. The two correctly mentioned steps represent two of the following options. Select the best ones to choose from.
I. Phase one is to determine the risk premium for each risk by adding an acceptable loss ratio to the gross premium.
II. Phase two is to split each risk premium into a risk premium for the continuation of the transition business and a risk premium for the transition to the re-insurer.
III. Phase one is to determine the risk premium for each risk by multiplying an unacceptable loss ratio to the gain premium.
IV. Phase two is to add up each risk premium into a risk premium for the discontinuation of the transition business and a risk premium for the transition to the re-insurer.Correct
Stage 1: predict the risk premium for each risk by adding an acceptable loss ratio to the gross premium. Step 2: Split each risk premium into the risk premium for the continuation of the transferor and the risk premium for the guarantee to the re-insurer.
Incorrect
Stage 1: predict the risk premium for each risk by adding an acceptable loss ratio to the gross premium. Step 2: Split each risk premium into the risk premium for the continuation of the transferor and the risk premium for the guarantee to the re-insurer.
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Question 28 of 30
28. Question
Which of the following is the calculation of the largest damage that could occur from a single explosion, taking into account the current mitigating measures?
Correct
PML (Probable Maximum Loss) is an estimation of the greatest damage that may occur from a single explosion, taking into account current prevention mechanisms (such as firewalls or sprinklers). PMLs are meaningless for assessing vulnerability to natural disasters.
Incorrect
PML (Probable Maximum Loss) is an estimation of the greatest damage that may occur from a single explosion, taking into account current prevention mechanisms (such as firewalls or sprinklers). PMLs are meaningless for assessing vulnerability to natural disasters.
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Question 29 of 30
29. Question
The stochastic process (Xt)t-a-R+ is called the Lévy process as it begins at 0, accepts a càdlàg modification and has:
Correct
The stochastic method (Xt)t-a-R+ is called the Lévy cycle as it begins at 0, accepts a càdlàg change and has stationary and autonomous increments. That’s to assume, almost definitely, X0 = 0. Stationary: for every s < t Xt − Xs is equal to Xt−s in distribution. Specific increments: for every 0 ≤ t1 ≤ · · · ≤ tn <, for the variables Xt1, Xt2 − Xt1, −. Xtn − Xtn −1 is different.
Incorrect
The stochastic method (Xt)t-a-R+ is called the Lévy cycle as it begins at 0, accepts a càdlàg change and has stationary and autonomous increments. That’s to assume, almost definitely, X0 = 0. Stationary: for every s < t Xt − Xs is equal to Xt−s in distribution. Specific increments: for every 0 ≤ t1 ≤ · · · ≤ tn <, for the variables Xt1, Xt2 − Xt1, −. Xtn − Xtn −1 is different.
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Question 30 of 30
30. Question
The decision to reinsure is an essential method to modify:
Correct
The decision to reinsure is an important mechanism for modifying the financial structure of a corporation, which, in effect, provides the ability to build (enhance) shareholder interest.
Incorrect
The decision to reinsure is an important mechanism for modifying the financial structure of a corporation, which, in effect, provides the ability to build (enhance) shareholder interest.