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Certificate In Reinsurance Premium Access
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Question 1 of 30
1. Question
When we rely so much on reinsurance as a source of funding, we can face higher financial costs. Applying such a standard is a way of ensuring that capital is largely compatible with our total non-reinsurance risk. This law can be referred to as:
I. Liquidity rule
II. Solvency rule
III. Solution to solvency rule
IV. Capital Diversification RuleCorrect
Capital Diversification Rule: Gross premium volume / Capital + Loss reserves = approximately 200 percent.
If we over-rely on reinsurance as a source of capital, we may face higher financial costs (potentially through dependence on reinsurers). Implementing such a condition is a way of ensuring that capital is largely in line with our total non-reinsurance risk. This law is also a guideline on liquidity.Incorrect
Capital Diversification Rule: Gross premium volume / Capital + Loss reserves = approximately 200 percent.
If we over-rely on reinsurance as a source of capital, we may face higher financial costs (potentially through dependence on reinsurers). Implementing such a condition is a way of ensuring that capital is largely in line with our total non-reinsurance risk. This law is also a guideline on liquidity. -
Question 2 of 30
2. Question
In comparison to theoretical models, experts have developed expertise based on practice. Such standards have been enacted for properties and not for other business lines. It is attributed to the high degree of reinsurance on this line of business. Which of the following formulas is for the capability rule?
Correct
Upon proportional reassurance, the overall risk exposure (net capacity) would be in line with the risk premium, otherwise non-proportional reassurance will tolerate too much risk:
Net Capacity/Net Premiums < 10%Incorrect
Upon proportional reassurance, the overall risk exposure (net capacity) would be in line with the risk premium, otherwise non-proportional reassurance will tolerate too much risk:
Net Capacity/Net Premiums < 10% -
Question 3 of 30
3. Question
From the laws that have been established for properties because of the high degree of reinsurance for this line of operation, in which of the following rules do we usually seek to ensure that a single claim has no more than 2% effect on the combined ratio?
Correct
The amount of risk retained after incremental reinsurance will be too high. To order to minimize net loss, we should complete non-proportional reinsurance. In fact, we are seeking to stop a single argument having no more than 2% effect on the cumulative ratio:
Net Non-Prop. Retention/Net Premiums approx 2%Incorrect
The amount of risk retained after incremental reinsurance will be too high. To order to minimize net loss, we should complete non-proportional reinsurance. In fact, we are seeking to stop a single argument having no more than 2% effect on the cumulative ratio:
Net Non-Prop. Retention/Net Premiums approx 2% -
Question 4 of 30
4. Question
Picard and Besson provide the concept of reinsurance. Their description includes two comments on the legal existence of the reinsurance undertaking. Choose the statements correctly mentioned in the description referred to above.
I. It indicates that insurance and reinsurance operations, which are similar on the economic level, are absolutely legitimate in nature.
II. It shows that the reinsurance company, in effect, is exploiting the insurer’s policies.
III. It indicates that, in exchange for insurance, the insurer makes a firm contribution to the liability faced by the initiator of reinsurance.
IV. It indicates that, in exchange for compensation, the reinsurer makes a firm contribution to the liability faced by the transferor.Correct
In the first case, it demonstrates that, in exchange for remuneration, the reinsurer makes a clear contribution to the liability faced by the transferor. Reinsurance is also compensation to the insured. It also reveals that insurance and reinsurance operations, which are similar on an economic basis, are simply legal in nature.
Incorrect
In the first case, it demonstrates that, in exchange for remuneration, the reinsurer makes a clear contribution to the liability faced by the transferor. Reinsurance is also compensation to the insured. It also reveals that insurance and reinsurance operations, which are similar on an economic basis, are simply legal in nature.
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Question 5 of 30
5. Question
Reinsurance agreements are not insurance contracts, so underwriters are not insurers under the:
Correct
Under French regulation, reinsurance contracts are not insurance guarantees and, on the other hand, reinsurers are not insurance agencies. Reinsurance pacts are not insurance agreements. In France, Provision L 111-1 of the Insurance Code specifies that reinsurance activities are exempt from the application of the legislation on insurance contracts. The same is true for most foreign laws.
Incorrect
Under French regulation, reinsurance contracts are not insurance guarantees and, on the other hand, reinsurers are not insurance agencies. Reinsurance pacts are not insurance agreements. In France, Provision L 111-1 of the Insurance Code specifies that reinsurance activities are exempt from the application of the legislation on insurance contracts. The same is true for most foreign laws.
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Question 6 of 30
6. Question
In 2011, premiums paid by primary insurers amounted to US$ 223 billion, of which US$ 170 billion in non-life insurance and US$ 53 billion in life insurance. Remember that the largest number of assignments can be identified in North America. This can be demonstrated by two of the following claims set out below. Choose the correct ones.
I. The fact that North America is heavily open to resources and low chance of exposure is a justification for this.
II. That is because of the small scale of the insurance business of the firm.
III. Most of the reasons for this is that North America is heavily vulnerable to natural hazards and to litigation threats.
IV. It’s attributed to the massive scale of the insurance industry in the business.Correct
This can be interpreted, on the one hand, by the large scale of the insurance provider market there and, on the other side, by the reality that North America is heavily vulnerable to natural hazards and liability threats.
Incorrect
This can be interpreted, on the one hand, by the large scale of the insurance provider market there and, on the other side, by the reality that North America is heavily vulnerable to natural hazards and liability threats.
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Question 7 of 30
7. Question
Reinsurance has historically been much more focused than direct insurance. The pattern has intensified since the early 1990s. Previously, which of the following are the 3 most significant places of employment for reinsurance companies?
I. United States
II. China
III. Switzerland
IV. GermanyCorrect
Historically, Germany, the United states and Switzerland are the three most important residences for reinsurance firms. Nevertheless, Lloyds of the London sector is still a major player and a large supply has been established in Bermuda over the last 25 years. Monoline firms, specializing in natural disasters, were initially founded there for tax and regulatory purposes.
Incorrect
Historically, Germany, the United states and Switzerland are the three most important residences for reinsurance firms. Nevertheless, Lloyds of the London sector is still a major player and a large supply has been established in Bermuda over the last 25 years. Monoline firms, specializing in natural disasters, were initially founded there for tax and regulatory purposes.
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Question 8 of 30
8. Question
Under which of the following reassurance procedures, the transferor decides to delegate all or part of the risks in a given category or subcategory over a given duration, most much equivalent to the accounting period, and the reinsurer is obligated to consider all the assignments suggested to it?
Correct
Obligatory reinsurance preserves the balance of the contracting parties. With such conventions, the word “obligatory” is also removed. During these activities, the transferor decides to cede all or part of the risks under a given category or subcategory for a specified time in compliance with the protocols laid down, and the reinsurer is obligated to recognize all cessions.
Incorrect
Obligatory reinsurance preserves the balance of the contracting parties. With such conventions, the word “obligatory” is also removed. During these activities, the transferor decides to cede all or part of the risks under a given category or subcategory for a specified time in compliance with the protocols laid down, and the reinsurer is obligated to recognize all cessions.
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Question 9 of 30
9. Question
The three reassurance strategies are facultative reassurance, facultative-obligatory reassurance, and mandatory reassurance. These categories shall define the rights and obligations of the contracting parties. Which of the statements are accurate with respect to the facultative reinsurance?
I. During these activities, the transferor decides to cede, according to protocols, all risks under a given division over a specified period of time.
II. The transferor intends to cover this risk, which may be agreed in full or in part by one or more market reinsurers.
III. Its aim is to cover the probability of a risk for a category or subcategory within a given time.
IV. The target of the treaty is a defined risk, already evaluated by the insurer who forwards his report to prospective re-insurers.Correct
Historically, facultative reassurance is the first method of coverage. The goal of the Treaty is a defined risk, already evaluated by the insurer who delegates his analysis to prospective reinsurers. The transferor offers to cover this risk, which may be agreed in full or in part by one or more sector reinsurers.
Incorrect
Historically, facultative reassurance is the first method of coverage. The goal of the Treaty is a defined risk, already evaluated by the insurer who delegates his analysis to prospective reinsurers. The transferor offers to cover this risk, which may be agreed in full or in part by one or more sector reinsurers.
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Question 10 of 30
10. Question
The related direct insurance portfolio needs to be specified as the duration of coverage. For example, in the case of lawsuits resulting from illnesses caused by asbestos. The claims asserted during the time protected by the agreement come beyond the meaning of the treaty if the settlement is on:
Correct
In the case of other cases , for example involving qualified criminal responsibility, the dates of occurrence of the occurrences giving rise to them and the filing of claim of the insured may be somewhat different. The case for lawsuits resulting from ailments caused by asbestos. When the Treaty is based on claims made, the claims asserted within the time protected by the Treaty shall come under the meaning of the Treaty.
Incorrect
In the case of other cases , for example involving qualified criminal responsibility, the dates of occurrence of the occurrences giving rise to them and the filing of claim of the insured may be somewhat different. The case for lawsuits resulting from ailments caused by asbestos. When the Treaty is based on claims made, the claims asserted within the time protected by the Treaty shall come under the meaning of the Treaty.
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Question 11 of 30
11. Question
For the same way as an insurance policy, which of the following aspects must be specified for the particular insurance portfolio concerned?
I. The time of reporting.
II. The geographical position of the threats exposed.
III. The percentage of members who are not complicit in associated with increased risk.
IV. The technological complexity of the risks involved.Correct
The technical definition of the risks covered (e.g. criminal responsibility, vehicle), the geographical position of the risks covered (e.g. the entire globe, mainland France), and the coverage span must be specified. In the case of other cases, for example, involving qualified criminal responsibility, the date of occurrence of the occurrences giving rise to them, and the filing of the claim of the insured can be very different.
Incorrect
The technical definition of the risks covered (e.g. criminal responsibility, vehicle), the geographical position of the risks covered (e.g. the entire globe, mainland France), and the coverage span must be specified. In the case of other cases, for example, involving qualified criminal responsibility, the date of occurrence of the occurrences giving rise to them, and the filing of the claim of the insured can be very different.
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Question 12 of 30
12. Question
With respect to the pledge assurance, in some sections, the interval between the registration of the claim and the actual resolution of the claim by the transferor is about:
Correct
In a number of divisions, the period between the submission of the lawsuit and its actual resolution by the transferor is between 2 to 3 years. In the case of the largest claims, which are usually the most confident, this period can also be much longer. At this time, the transferor shall have a receivable from the reinsurer equal to the amount expected to have been ceded, bearing in mind the determination that might be made of the claim.
Incorrect
In a number of divisions, the period between the submission of the lawsuit and its actual resolution by the transferor is between 2 to 3 years. In the case of the largest claims, which are usually the most confident, this period can also be much longer. At this time, the transferor shall have a receivable from the reinsurer equal to the amount expected to have been ceded, bearing in mind the determination that might be made of the claim.
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Question 13 of 30
13. Question
Payment processes are one of the provisions specific to all reinsurance treaties. When does the transferor collecting the payments and paying the compensation amounts?
Correct
The transferor collects premiums and makes payments on a regular basis over the accounting period. The reproduction of these cash flows in real-time for the allocated portion will produce tremendous accounting costs.
Incorrect
The transferor collects premiums and makes payments on a regular basis over the accounting period. The reproduction of these cash flows in real-time for the allocated portion will produce tremendous accounting costs.
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Question 14 of 30
14. Question
The transferor remains responsible for the remainder of the liabilities to the insured, arrangements usually set down protocols that the reinsurers pledge their commitments in such a manner that the solvency of the transferor does not depend explicitly on that of the reinsurers. There are three styles in France. Identify the right ones.
I. He may provide a guarantee from his personally known people.
II. He may have a bank guarantee.
III. The individual can pledge securities (generally high rate obligations) to the benefit of the insured.
IV. The reinsurer may provide the applicant with a loan whose repayment depends on the settlement of its liability against the insured.Correct
In France, these are of three types: the reinsurer may make a “cash contribution,” which entails, in fact, supplying the lender with a loan whose repayment relies on the payment of his obligations to the insured. It can also assign securities (generally high rate obligations) to the benefit of the insured. Eventually, a bank guarantee may be issued.
Incorrect
In France, these are of three types: the reinsurer may make a “cash contribution,” which entails, in fact, supplying the lender with a loan whose repayment relies on the payment of his obligations to the insured. It can also assign securities (generally high rate obligations) to the benefit of the insured. Eventually, a bank guarantee may be issued.
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Question 15 of 30
15. Question
Reinsurance contracts most frequently set down a clause that gives the transferor a percentage of the income of the reinsurers. Which of the following alternatives is implemented in its most basic form?
Correct
In the most simple nature, if the result is favorable, a certain amount of the final outcome of the settlement is to be returned to the transferor. In addition, this provision is multi-year and calls for an unlimited forwarding of damages.
Incorrect
In the most simple nature, if the result is favorable, a certain amount of the final outcome of the settlement is to be returned to the transferor. In addition, this provision is multi-year and calls for an unlimited forwarding of damages.
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Question 16 of 30
16. Question
From the list of provisions applicable to all reinsurance contracts, which of the following points out how reinsurers will program successfully at the grounds of the transferor?
Correct
Audit: Some treaties set out how reinsurers will perform audits in the cedant premises. Such rules are seldom seen in practice. It appears when the reinsurers participate specifically in the administration of the lawsuit and, in this situation, have access to complete details in the hands of the transferor.
Incorrect
Audit: Some treaties set out how reinsurers will perform audits in the cedant premises. Such rules are seldom seen in practice. It appears when the reinsurers participate specifically in the administration of the lawsuit and, in this situation, have access to complete details in the hands of the transferor.
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Question 17 of 30
17. Question
Under which type of profit-sharing often prevails in non-proportional reassurance a certain sum shall be paid to the transferor where no incident causing payout from the re-insurer has impaired the contract?
Correct
A kind of benefit sharing that is often widespread in non-proportional reinsurance is the “no claims bonus.” A set amount shall be returned to the transferor if no incident causing payout from the reinsurer has impacted the deal.
Incorrect
A kind of benefit sharing that is often widespread in non-proportional reinsurance is the “no claims bonus.” A set amount shall be returned to the transferor if no incident causing payout from the reinsurer has impacted the deal.
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Question 18 of 30
18. Question
Proportional reinsurance contracts are called as follows, as they are established in an order that:
Correct
The Proportional Reinsurance Treaties are so-called because they are built in order that:
Ceded Premiums / Gross Premiums = Ceded Premiums / Gross Claims
The premium delegated and the rate of entitlement are equal.Incorrect
The Proportional Reinsurance Treaties are so-called because they are built in order that:
Ceded Premiums / Gross Premiums = Ceded Premiums / Gross Claims
The premium delegated and the rate of entitlement are equal. -
Question 19 of 30
19. Question
From the array of forms of proportional and non-proportional treaties, which of the following are the subtypes of proportional treaties?
I. Excess-of-Loss Treaty
II. The surplus Treaty
III. Annual Aggregate Loss Treaty
IV. The quota-share TreatyCorrect
The Proportional Reinsurance Treaties are so called because they are intended to guarantee that the premium given and the rate of exemption are equivalent. The two types of Proportional Reinsurance treaties are the quota-share arrangement and the surplus arrangement.
Incorrect
The Proportional Reinsurance Treaties are so called because they are intended to guarantee that the premium given and the rate of exemption are equivalent. The two types of Proportional Reinsurance treaties are the quota-share arrangement and the surplus arrangement.
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Question 20 of 30
20. Question
Quota-Share is the most basic reassurance arrangement. The reinsurer pays a sum (1 − a) to his premiums as well as his aggregate claims. (1 – a) is the rate of cession and ‘a’ the rate of maintenance. Which one of the following is the benefit of it?
Correct
The benefit of this Agreement is the simplicity with which it can be enforced and handled. For a quota-share, the transferor and the reinsurer have almost the same S / P ratio. This property is indeed a double-edged one.
Incorrect
The benefit of this Agreement is the simplicity with which it can be enforced and handled. For a quota-share, the transferor and the reinsurer have almost the same S / P ratio. This property is indeed a double-edged one.
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Question 21 of 30
21. Question
Under the Reinsurance Act, if the compensation rate is equal to the amount of investment of the transferor, which of the following alternatives is considered?
I. The insurer is increasing its business competitiveness.
II. The Treaty is completely proportional.
III. The Treaty is completely non-proportional.
IV. The insurer yields greater income than the company operation.Correct
When the fee rate is equal to the transferor ‘s cost rate, the arrangement is completely proportionate: Ceded Premiums / Gross Premiums = Ceded Claims / Gross Claims = Net Result / Gross Result. If it is lower, the insurer yields more profit than the business activity. When it is higher, by reinsuring, the insurer can improve its business productivity (result / net activity).
Incorrect
When the fee rate is equal to the transferor ‘s cost rate, the arrangement is completely proportionate: Ceded Premiums / Gross Premiums = Ceded Claims / Gross Claims = Net Result / Gross Result. If it is lower, the insurer yields more profit than the business activity. When it is higher, by reinsuring, the insurer can improve its business productivity (result / net activity).
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Question 22 of 30
22. Question
While quotas-share arrangements have lost momentum to non-proportional reinsurance in recent decades, they are still commonly used to fund the opening of new branches of industry. In this case, the deal:
I. Persists 3 to 8 years.
II. Is a multi-year deal.
III. Involves a dramatic decline in the rate of cession and the fee rate.
IV. Boosts up the initial legal capital needs of the transition firm.Correct
The arrangement is a multi-year deal which usually extends from 3 and 8 years. The rate of cession and the fee rate declined dramatically in time. The high initial transfer rate lowers the initial funding requirements of the transfer company.
Incorrect
The arrangement is a multi-year deal which usually extends from 3 and 8 years. The rate of cession and the fee rate declined dramatically in time. The high initial transfer rate lowers the initial funding requirements of the transfer company.
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Question 23 of 30
23. Question
One form of proportional treaty is the Surplus Treaty, which corresponds to events such as:
I. An earlier informed disease outbreak
II. Theft
III. A sudden demise
IV. A fire outbreakCorrect
Surplus treaties refer to categories under which the insured interest is specified without any confusion (fire, robbery, death). This is effectively a quota allocation, the transition rate of which is not determined until the Agreement is concluded but is measured on a risk-by-risk basis after the contract is signed.
Incorrect
Surplus treaties refer to categories under which the insured interest is specified without any confusion (fire, robbery, death). This is effectively a quota allocation, the transition rate of which is not determined until the Agreement is concluded but is measured on a risk-by-risk basis after the contract is signed.
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Question 24 of 30
24. Question
Which of the following explains the significance of the surplus treaty over the proportional quota-share agreement?
Correct
The benefit of the surplus of the quota-share is that it helps one to predict the risk profile of the retention with more precision: the higher the probability of the transferor, the better it yields.
Incorrect
The benefit of the surplus of the quota-share is that it helps one to predict the risk profile of the retention with more precision: the higher the probability of the transferor, the better it yields.
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Question 25 of 30
25. Question
The surplus treaty and quota-share are two main types of proportional treaties. From the list of drawbacks of the aforementioned sub-types, which of the following are the cons of the quota share?
I. The consistency of the result is not the most effective way to reduce the uncertainty of the net portfolio.
II. It requires more financial control than in the case of the quota share.
III. Deposit prices, premiums, and ceded claims are calculated on a policy-by-policy basis that is unreasonably complicated because the number of threats is extremely small.
IV. The concerns with social risks are mitigated.Correct
The issues of moral hazards are mitigated: the insurer and the re-insurer have reasonably congruent interests and the fact that they are insured does not cause the transferor to conduct in a way that is adverse to the re-insurer if the cost of retention is appropriate. In addition, this correlation in result is not the most efficient way to reduce the uncertainty of the net portfolio.
Incorrect
The issues of moral hazards are mitigated: the insurer and the re-insurer have reasonably congruent interests and the fact that they are insured does not cause the transferor to conduct in a way that is adverse to the re-insurer if the cost of retention is appropriate. In addition, this correlation in result is not the most efficient way to reduce the uncertainty of the net portfolio.
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Question 26 of 30
26. Question
Which of the following applies to all treaties what, by their design, do not satisfy properties of similarities between the levels of the premiums granted and the claims granted?
Correct
As the names indicate, non-proportional reinsurance includes all treaties which, by reason of their creation, do not satisfy properties of similarities between the prices of the premiums granted and the claims issued.
Incorrect
As the names indicate, non-proportional reinsurance includes all treaties which, by reason of their creation, do not satisfy properties of similarities between the prices of the premiums granted and the claims issued.
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Question 27 of 30
27. Question
A necessary condition for non-proportional reinsurance is the stringent description of:
Correct
Its explanation of triggering the payments of the reinsurer. The principle of event is central to this interpretation. In the case of a storm warranty, the incident is a mixture of claims related to winds of extreme severity which the insured has sustained in a given geographical area within a given duration, usually seventy-two hours. Consequently, the case as described in the contract is not the same as the weather event.
Incorrect
Its explanation of triggering the payments of the reinsurer. The principle of event is central to this interpretation. In the case of a storm warranty, the incident is a mixture of claims related to winds of extreme severity which the insured has sustained in a given geographical area within a given duration, usually seventy-two hours. Consequently, the case as described in the contract is not the same as the weather event.
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Question 28 of 30
28. Question
From the perspective of reinsurance, in the case of automobiles, the accident affecting many account holders of the company would usually be treated as:
Correct
So far as vehicles are concerned, the incident affecting many policy holders of the company would usually be deemed to be a single occurrence from the point of view of reinsurance, while from the point of view of direct compensation, there are typically as many vents as the policy holders involved.
Incorrect
So far as vehicles are concerned, the incident affecting many policy holders of the company would usually be deemed to be a single occurrence from the point of view of reinsurance, while from the point of view of direct compensation, there are typically as many vents as the policy holders involved.
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Question 29 of 30
29. Question
Which of the following are deals which are, in all ways, equivalent to direct insurance contracts with a premium and minimal insurer guarantee?
Correct
Excess-of-loss policies are, in all ways, similar to regular insurance plans with a premium and minimal commitment from the insurer. In the case of an excess-of-loss deal aXSb, the liability of the reinsurer shall be the following sum of the expense x of the incident protected by the protection of the treaty:
Min (max( x-b, 0),aIncorrect
Excess-of-loss policies are, in all ways, similar to regular insurance plans with a premium and minimal commitment from the insurer. In the case of an excess-of-loss deal aXSb, the liability of the reinsurer shall be the following sum of the expense x of the incident protected by the protection of the treaty:
Min (max( x-b, 0),a -
Question 30 of 30
30. Question
Accordingly in the Excess-of-Loss Treaty, the term aXSb means that the reinsurer charges at most ‘a’ for the expense part approaching ‘b.’ In terms of reinsurance jargon, which of the following descriptions are correct?
I. a is the treaty ceiling.
II. a is the treaty guarantee.
III. a + b is the treaty ceiling.
IV. b is the treaty priority.Correct
The reinsurer shall interfere if the risk of the case is greater than b. It shall then pay the costs of the event subject to deductible b, but not more than a sum. Accordingly, the term aXSb means that the reinsurer spends at most a portion of the sum approaching b. For reassurance jargon, b is the Treaty priority; an is the Treaty guarantee; and + b is the Treaty limit.
Incorrect
The reinsurer shall interfere if the risk of the case is greater than b. It shall then pay the costs of the event subject to deductible b, but not more than a sum. Accordingly, the term aXSb means that the reinsurer spends at most a portion of the sum approaching b. For reassurance jargon, b is the Treaty priority; an is the Treaty guarantee; and + b is the Treaty limit.