Reinsurance Program Considerations

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Questions and Answers

What is the purpose of a reinsurance program?

  • To eliminate all risk for the ceding company
  • To take over all the risk from the ceding company
  • To support the ceding company for the portion of risk they cannot handle (correct)
  • To compete with the ceding company in risk management

Why is there no typical (ideal) reinsurance program?

  • Regulatory authorities prohibit standard reinsurance programs
  • Insurance companies do not require reinsurance programs
  • The reinsurer determines the structure of the reinsurance program
  • Each company's situation regarding loss exposure and financial solidity is unique (correct)

What does a typical reinsurance program involve?

  • A combination of several methods of protection (correct)
  • An exclusive focus on excess of loss reinsurance
  • A complete transfer of risk to the reinsurer
  • A single reinsurance type such as quota share or surplus

What does a reinsurance program consist of?

<p>A combination of ceded reinsurance covers tailor-made for the company (A)</p> Signup and view all the answers

What determines the need for a unique reinsurance program for each company?

<p>Loss exposure, financial solidity, management culture, future plans, and marketing opportunities (D)</p> Signup and view all the answers

In a Quota Share-Surplus Method, what protects the reinsured's retention under the surplus treaty?

<p>Underlying Quota Share arrangement (B)</p> Signup and view all the answers

What happens as the cedant grows in business and starts to write large volumes in a Quota Share-Surplus Method?

<p>Reinsurer's share of the quota share is gradually reduced (D)</p> Signup and view all the answers

What must be true about participating reinsurers in a Quota Share-Surplus Method?

<p>They must be the same across both treaties (B)</p> Signup and view all the answers

How is the capacity of the surplus expressed in a Quota Share-Surplus Method?

<p>As a multiple of the gross retention (D)</p> Signup and view all the answers

In a Quota Share-Surplus Method, when does the use of Quota Share come into play?

<p>Before the surplus (C)</p> Signup and view all the answers

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