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Question 1 of 30
1. Question
Which of the following has an incident boundary that prevents the implementation of the system when a lot of threats are caused by the same occurrence?
Correct
Per risk systems with a total number of re-establishments (and reciprocal plans) have a cap per case: stop the operation of the system when multiple threats are caused due to the same incident.
Incorrect
Per risk systems with a total number of re-establishments (and reciprocal plans) have a cap per case: stop the operation of the system when multiple threats are caused due to the same incident.
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Question 2 of 30
2. Question
Which of the following provisions establishes an exposure-based reassurance system for policies?
I. The ACOD/A clause
II. The ACOD/B clause
III. The ACOD/C clause
IV. The ACOD/D clauseCorrect
There are three separate accident-circuit workplace disorder (ACOD) provisions. The ACOD / A clearly states that every case is a special occurrence. The ACOD / C clause applies to countries such as Australia. The ACOD / B provision shall state the reinsurance scheme for exposure-based plans.
Incorrect
There are three separate accident-circuit workplace disorder (ACOD) provisions. The ACOD / A clearly states that every case is a special occurrence. The ACOD / C clause applies to countries such as Australia. The ACOD / B provision shall state the reinsurance scheme for exposure-based plans.
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Question 3 of 30
3. Question
A provider that has already been re-assured of a payout equivalent to 10M. The insurer shall have a premium of 15 M equivalent to an investment equal to three years. The deficit is equivalent to 5 M for each of the three years, which is below maintenance. While the net risk is better than the maintenance, the insurer has no payout! In order to prevent this situation, which provision states that maintenance and restriction will be split between the years of exposure?
Correct
The ACOD / B section defines the reassurance process for exposure-based policies. To order to prevent this situation, the ACOD/B provision states that maintenance and restriction must be separated between the years of access.
Incorrect
The ACOD / B section defines the reassurance process for exposure-based policies. To order to prevent this situation, the ACOD/B provision states that maintenance and restriction must be separated between the years of access.
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Question 4 of 30
4. Question
Assume a regulation released in 2008 and influenced by a defeat that happened in 2009. In the case of which of the following bases of attachment, does the 2008 software have an impact?
I. The loss occurring basis
II. The biomedical research basis
III. The risk attaching basis
IV. The accident circle occupational basisCorrect
In the case of a risk-attachment system, it is the 2008 plan that would have an effect. On the opposite, it would be the 2009 system in the case of a defeat happening on the grounds of the error. The failure is the most widely used criterion, except for manufacturing or maritime industry lines.
Incorrect
In the case of a risk-attachment system, it is the 2008 plan that would have an effect. On the opposite, it would be the 2009 system in the case of a defeat happening on the grounds of the error. The failure is the most widely used criterion, except for manufacturing or maritime industry lines.
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Question 5 of 30
5. Question
For example, if a loss-in-reinsurance policy is not extended, the damages that result after the expiration date relating to the in-force policies will not be compensated. In this case, which of the following provisions will compensate for the losses?
Correct
For this case, there is usually a run-off clause to offset certain damages. In the opposite, in the case of a new risk-attachment agreement, there is a delay in the scope of risks relating to measures adopted before the effective date of the treaty. In this scenario, the risk-attachment justification can be updated to incorporate in-force policies.
Incorrect
For this case, there is usually a run-off clause to offset certain damages. In the opposite, in the case of a new risk-attachment agreement, there is a delay in the scope of risks relating to measures adopted before the effective date of the treaty. In this scenario, the risk-attachment justification can be updated to incorporate in-force policies.
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Question 6 of 30
6. Question
In the case that a transferor has a company in various countries and different currencies, there are unique provisions. Which of the provisions in question defines the currency of which any payment will be made?
I. Interlocking clause
II. Currency clause
III. Run-off clause
IV. Currency fluctuation clauseCorrect
The money provision defines the money of which any payment is to be made. We use the exchange rate judgment on the date of money transfer for translation.
Incorrect
The money provision defines the money of which any payment is to be made. We use the exchange rate judgment on the date of money transfer for translation.
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Question 7 of 30
7. Question
Which clause identifies the overall interest of the lawsuit at the time of final judgment, what means that the stay is expected to be reassessed at a considerably higher level?
Correct
The London Market Index Clause (LMIC) indexes the overall interest of the dispute at the time of the actual judgment, which ensures that the protection is expected to be reassessed at a far higher point than the European version of the provision. The reason why the LMIC is designed differently is to reflect the normal pattern of lump-sum third party responsibility agreements in the United Kingdom.
Incorrect
The London Market Index Clause (LMIC) indexes the overall interest of the dispute at the time of the actual judgment, which ensures that the protection is expected to be reassessed at a far higher point than the European version of the provision. The reason why the LMIC is designed differently is to reflect the normal pattern of lump-sum third party responsibility agreements in the United Kingdom.
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Question 8 of 30
8. Question
The key worry of the reinsurer is to receive a reasonably high premium, while the insurer needs to pay a reasonable premium. Which of the options in question is the fee payable by the convincing party at the outset of the contract?
I. The adjusted premium
II. The minimum premium
III. The gross net premium
IV. The deposit premiumCorrect
The investment fee shall be the amount owed by the trusting party at the outset of the contract. This premium is measured using the details given by the insurer to the reinsurer (a growth portfolio that reflects the growth forecast by the insurer may exist).
Incorrect
The investment fee shall be the amount owed by the trusting party at the outset of the contract. This premium is measured using the details given by the insurer to the reinsurer (a growth portfolio that reflects the growth forecast by the insurer may exist).
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Question 9 of 30
9. Question
The primary issue of the reinsurer is to have an adequately hefty fee. In comparison, the insurer needs to pay a decent rate. From the comments below, which of the comments defines the essence of the deposit premium?
I. This premium is determined using the details provided by the insurer to the reinsurer.
II. The insurance premium shall be the amount equal to the adjustment of this rate to the insurer’s calculation of the amount of profits.
III. The fixed premium shall be the minimum price that the reinsurer wishes to earn towards the end of the year.
IV. The adjusted premium shall take into account actual premium profits during the treaty year and it is compatible with allowing incremental changes to the reinsurance premium.Correct
The insurance premium shall be the amount equal to the adjustment of this rate to the insurer’s calculation of the amount of profits. The adjusted premium shall take into account actual premium profits during the treaty year and It is compatible with allowing incremental changes to the reinsurance premium. The fixed premium shall be the minimum price that the reinsurer wishes to earn towards the end of the year.
Incorrect
The insurance premium shall be the amount equal to the adjustment of this rate to the insurer’s calculation of the amount of profits. The adjusted premium shall take into account actual premium profits during the treaty year and It is compatible with allowing incremental changes to the reinsurance premium. The fixed premium shall be the minimum price that the reinsurer wishes to earn towards the end of the year.
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Question 10 of 30
10. Question
What kind of risk does multi-year reinsurance schemes, specifically the CAT Bonds, usually last three years, have?
Correct
The reset risk occurs for multi-year reinsurance contracts, especially for CAT Bonds, which usually last three years. The reset risk resides in the fact that perhaps the reinsurance policy will be tailored to the portfolio insured during the first year of operation, but no longer for the subsequent years.
Incorrect
The reset risk occurs for multi-year reinsurance contracts, especially for CAT Bonds, which usually last three years. The reset risk resides in the fact that perhaps the reinsurance policy will be tailored to the portfolio insured during the first year of operation, but no longer for the subsequent years.
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Question 11 of 30
11. Question
The reset risk consists in the assumption that the reinsurance plan will be adjusted to the portfolio in question in the first year of operation, but no longer in the following years. This can not be due to:
I. A decrease in the overall insured sum due to inflation or a decrease in underwriting policies.
II. A shift in the approach to risk.
III. An important change in the Currency rate if there is no exchange fluctuation provision.
IV. Consistency of the number of threats.Correct
This could be attributed to: an increase in the number of risks, a rise in the total volume insured based on inflation or a shift in the underwriting scheme, a major change in the FX rate because there is no currency fluctuation provision and a rise in the risk perception, for instance in the event of a new release of CAT software.
Incorrect
This could be attributed to: an increase in the number of risks, a rise in the total volume insured based on inflation or a shift in the underwriting scheme, a major change in the FX rate because there is no currency fluctuation provision and a rise in the risk perception, for instance in the event of a new release of CAT software.
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Question 12 of 30
12. Question
Which clause states that if the excess risk convention covers the net maintenance of the proportional settlement, it will not cover the insurer if one of the proportional re-insurer refuses to resolve the share on the basis of a proportional treaty?
Correct
The reinsurer does not want to be blamed for the bankruptcy of other insurers. Therefore, except as specifically specified, in the case of default by a re-insurer covering a line, the other re-insurers do not pay the resulting refund. To order to eliminate all confusion, the clause on the net maintained lines describes the information referred to above.
Incorrect
The reinsurer does not want to be blamed for the bankruptcy of other insurers. Therefore, except as specifically specified, in the case of default by a re-insurer covering a line, the other re-insurers do not pay the resulting refund. To order to eliminate all confusion, the clause on the net maintained lines describes the information referred to above.
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Question 13 of 30
13. Question
Which of the following is the termination provision stating that in situations when the reinsurer is unpayable, refuses to satisfy its material duty under the reinsurance arrangement, or suffers a downgrading of the financial strength rating to a certain amount, the insurer has the option to cancel the reinsurance arrangement with immediate non-retroactive effect?
I. Commutation clause
II. Clean cut clause
III. Cut off clause
IV. Downgrading clauseCorrect
Downgrading provisions states that in situations when the reinsurer is insolvent, elects to end its current contract, refuses to meet its material duty under the reinsurance arrangement, or suffers a reduction in financial strength to a certain amount, the insurer has the option to cancel the reinsurance arrangement with immediate non-retroactive effect.
Incorrect
Downgrading provisions states that in situations when the reinsurer is insolvent, elects to end its current contract, refuses to meet its material duty under the reinsurance arrangement, or suffers a reduction in financial strength to a certain amount, the insurer has the option to cancel the reinsurance arrangement with immediate non-retroactive effect.
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Question 14 of 30
14. Question
There are various exit provisions in order to shield the insurer from the financial distress of reinsurers. Which of the following is mostly used in proportionate treaties, but never in non-proportional ones?
I. The commutation clause
II. The clean-cut clause
III. Downgrading provision
IV. Premium portfolio transfer clauseCorrect
The clean-cut clause is sometimes found in proportional treaties but not in non-proportional treaties. Nevertheless, the danger to the insurer is that the policies are not adjusted (e.g. the case of legitimate inflation). In addition, such treaties are difficult to quote.
Incorrect
The clean-cut clause is sometimes found in proportional treaties but not in non-proportional treaties. Nevertheless, the danger to the insurer is that the policies are not adjusted (e.g. the case of legitimate inflation). In addition, such treaties are difficult to quote.
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Question 15 of 30
15. Question
Where there is no breach, the provision that covers the insurer in the case of failure by the insured in the years after the year of the contract shall be referred to as:
Correct
Where there is no termination, the interpretation of the contractual reserve provision shall shield the insurer from the default of the reinsurer in the years following the year of the deal. Indeed, this provision provides that the reinsurer shall deposit an amount equal to its share of the risk fund with the reassured at the time of the declaration of accounts.
Incorrect
Where there is no termination, the interpretation of the contractual reserve provision shall shield the insurer from the default of the reinsurer in the years following the year of the deal. Indeed, this provision provides that the reinsurer shall deposit an amount equal to its share of the risk fund with the reassured at the time of the declaration of accounts.
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Question 16 of 30
16. Question
Which two types of clauses are practically the same with solely a difference in the form of the arrangement that is intended to protect investors?
I. Representation of technical reserves clause
II. Securitization clauses
III. Clauses of the traditional multi-year reinsurance contracts
IV. Non-commutation clauseCorrect
The securitization provisions are exactly the same as those found in conventional multi-year reinsurance contracts. The biggest distinction is the framework of the deal that is made in order to secure creditors.
Incorrect
The securitization provisions are exactly the same as those found in conventional multi-year reinsurance contracts. The biggest distinction is the framework of the deal that is made in order to secure creditors.
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Question 17 of 30
17. Question
The first important question is which agency is to grant a CAT bond. Which of the following bodies is used by insurers for a strong public persona?
I. Agency model
II. The insurer
III. A reinsurer
IV. Transformer modelCorrect
This company could be an insurer (the business model). This is used by insurers who have a strong brand profile or by a reinsurer (transformer model). The reinsurer plays a role as a middleman. The downside is that the reinsurer checks the assets of the insurer, which ensures that customers have more trust because the insurer is not well-known.
Incorrect
This company could be an insurer (the business model). This is used by insurers who have a strong brand profile or by a reinsurer (transformer model). The reinsurer plays a role as a middleman. The downside is that the reinsurer checks the assets of the insurer, which ensures that customers have more trust because the insurer is not well-known.
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Question 18 of 30
18. Question
As regards the legal framework of the CAT bond issue, the counterparty contract with the company is regarded as a derivative contract in the case of:
Correct
The transaction contract with the company is treated as a reassurance contract in the case of a special purpose reassurance company (SPRV), however, it is regarded as a derivative contract in a special purpose vehicle ( SPV).
Incorrect
The transaction contract with the company is treated as a reassurance contract in the case of a special purpose reassurance company (SPRV), however, it is regarded as a derivative contract in a special purpose vehicle ( SPV).
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Question 19 of 30
19. Question
Keeping in mind the points concerning the establishment of a vehicle, which of the following involves higher legal expenses, but which facilitates many CAT bonds to be issued?
Correct
The use of the shelf system is opposed to a single car. The Shelf System entails greater compliance risks, which allows for the issuing of certain CAT bonds.
Incorrect
The use of the shelf system is opposed to a single car. The Shelf System entails greater compliance risks, which allows for the issuing of certain CAT bonds.
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Question 20 of 30
20. Question
Once a special fund is created, it remains to be seen if the question of a CAT bond would be a public offer or a private arrangement. Which of the following is prevalent in the united states, as it requires approval with the Securities and Exchange Commission and a procedure of disclosure?
Correct
In the United States, stock offers are high due to the need for approval with the Securities and Exchange Commission (SEC) and the mechanism with filing. Law 144A has been adopted with a view to entering US financial markets without making 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 the mechanism with filing. Law 144A has been adopted with a view to entering US financial markets without making a public offering.
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Question 21 of 30
21. Question
Bearing in mind the nature of the contract, one main factor is the form of trigger. For some of the reasons given, the type of trigger is important. Please pick the right choices.
I. This is critical for an investor who wants to optimize transparency.
II. This is important for an insurance provider that needs to elevate the simple risk.
III. This is critical for a reinsurer who wants to increase the opaqueness.
IV. This is important for an insurance provider that needs to mitigate the simple risk.Correct
The type of trigger is essential for: the insurance provider that wants to mitigate simple risk. Simple risk refers to the risk that the insurer is not adequately covered. Second, the investor who needs to optimize accountability.
Incorrect
The type of trigger is essential for: the insurance provider that wants to mitigate simple risk. Simple risk refers to the risk that the insurer is not adequately covered. Second, the investor who needs to optimize accountability.
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Question 22 of 30
22. Question
Assume if the layer defined in the cat bond crosses EUR 100 million above EUR 500 million and the sum of the cumulative claim to EUR 580 million, the bond is activated and the borrower collects EUR 80 million in recoveries. This was an illustration of:
Correct
A potential cause is an indemnity agreement dependent on the real damages suffered by the sponsor. There is no simple risk to the insurer, although there is a high chance of accountability for the lender.
Incorrect
A potential cause is an indemnity agreement dependent on the real damages suffered by the sponsor. There is no simple risk to the insurer, although there is a high chance of accountability for the lender.
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Question 23 of 30
23. Question
Which of the following stimuli is related to the physical features of incidents, such as wind speeds (for windstorms) of magnitudes (for earthquakes)?
I. A modeled loss transaction
II. An industry index transaction
III. A parametric transaction
IV. An indemnity transactionCorrect
Parametric transaction: the cause is related to the physical properties of incidents, such as wind speed or intensity. Once 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 triggered.
Incorrect
Parametric transaction: the cause is related to the physical properties of incidents, such as wind speed or intensity. Once 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 triggered.
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Question 24 of 30
24. Question
In the case of a parametric arrangement, which of the following would be easier for the regulator to actually acknowledge?
Correct
The sort of cause selected has a significant effect on the framework of the agreement. For example, in the case of a parametric transaction, the regulator would consider the SPV more readily than the SPRV as the recoveries are not specifically relevant to the real damages of the company due to the high-risk base.
Incorrect
The sort of cause selected has a significant effect on the framework of the agreement. For example, in the case of a parametric transaction, the regulator would consider the SPV more readily than the SPRV as the recoveries are not specifically relevant to the real damages of the company due to the high-risk base.
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Question 25 of 30
25. Question
The form of cause selected has clear consequences for the nature of the agreement. It also has consequences for the duration of the extension period. The length of the extension is required when:
Correct
An extension duration is required where there is a trigger incident 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 will take a few months.
Incorrect
An extension duration is required where there is a trigger incident 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 will take a few months.
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Question 26 of 30
26. Question
Which of the following statements describe the Non-proportional Pricing most accurately.
I. Reinsurance premiums for non-proportional arrangements are not necessarily calculated by a fixed proportional formula.
II. The relative pricing of the contracts does not rely on the transferor’s own insurance liability pricing.
III. In general, the pricing of non-proportional contracts does not depend on the price of the transferor on its own insurance risk.
IV. Reinsurance premiums for proportionate treaties are not necessarily set by a given proportional law.Correct
Unlike proportional deals, the non-proportional insurance premium is not necessarily set by a given proportional law. As a consequence, the pricing of non-proportional treaties usually does not rely on the price of the transferor on its own insurance risk.
Incorrect
Unlike proportional deals, the non-proportional insurance premium is not necessarily set by a given proportional law. As a consequence, the pricing of non-proportional treaties usually does not rely on the price of the transferor on its own insurance risk.
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Question 27 of 30
27. Question
Which of the following pricing strategies is commonly used in reinsurance, since it is easy and hence can act as a base for negotiation between reinsurance companies?
Correct
The process of burning expenses takes into account previous (over many years) portfolio statements. Previous practice is used for predicting the future. This pricing approach is commonly used in reinsurance because it is straightforward and can also act as a basis for negotiations between insurers and reinsurers.
Incorrect
The process of burning expenses takes into account previous (over many years) portfolio statements. Previous practice is used for predicting the future. This pricing approach is commonly used in reinsurance because it is straightforward and can also act as a basis for negotiations between insurers and reinsurers.
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Question 28 of 30
28. Question
In the case of non-proportional reinsurance, the price of a sheet is commonly expressed in:
Correct
In the case of non-proportional reinsurance, the price of a sheet is typically expressed as a percentage of the premium base term. 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
In the case of non-proportional reinsurance, the price of a sheet is typically expressed as a percentage of the premium base term. 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 29 of 30
29. Question
Assume that an insurance provider has the ability to actively pick and buy a certain amount of potential risk collateral. In this case, Hipp and Vogt used one of the following methods to obtain an optimal reassurance plan that minimizes the risk of ruin. Which of the following is the correct option?
Correct
In this situation, Hipp and Vogt used stochastic control theory techniques to develop an optimal reassurance strategy that minimizes the probability of ruin when the reinsurer shall measure his premium on the basis of the estimated benefit theory.
Incorrect
In this situation, Hipp and Vogt used stochastic control theory techniques to develop an optimal reassurance strategy that minimizes the probability of ruin when the reinsurer shall measure his premium on the basis of the estimated benefit theory.
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Question 30 of 30
30. Question
The basic corollary of the Modigliani-Miller Theorem asks us that, in order for insurance capital-structure decisions (including reinsurance) to be taken into consideration in some practical way, which of the following considerations should be taken into consideration?
I.Agency expenses and financial pressure
II. Personal expenses
III. Pay shields
IV. The amount of frictional moneyCorrect
This tells us that considerations such as frictional capital costs, including tax shelters, business and financial loss charges, need to be weighed in order for insurance asset-structure decisions (including reinsurance) to matter in any practical way.
Incorrect
This tells us that considerations such as frictional capital costs, including tax shelters, business and financial loss charges, need to be weighed in order for insurance asset-structure decisions (including reinsurance) to matter in any practical way.