FIL 355 Chapter 8: Reinsurance

Which one of the following is the term used for reinsurance of individual loss exposures in which the primary insurer chooses which loss exposures to submit to the reinsurer, and the reinsurer can accept or reject any loss exposures submitted? Choose one answer. A. Facultative reinsurance B. Treaty reinsurance C. Per risk excess of loss D. Per occurrence excess of loss

A. Facultative reinsurance

An insurer's ability to provide larger amounts of insurance for property loss exposures, or higher limits of liability for liability loss exposures, than it is otherwise willing to provide is Choose one answer. A. Large-line capacity. B. Novation. C. Portfolio management. D. Surplus relief.

A. Large-line capacity.

Which one of the following statements is correct regarding the use of treaty and facultative reinsurance? Choose one answer. A. Most treaties require that all loss exposures within the treaty's terms be reinsured. B. Primary insurers generally use facultative reinsurance as the foundation of their reinsurance program. C. Usually, primary insurers have only one reinsurance treaty with a single reinsurer. D. A primary insurer's underwriting policy and underwriting guidelines are usually developed by its treaty reinsurer.

A. Most treaties require that all loss exposures within the treaty's terms be reinsured.

A primary insurer uses reinsurance to Choose one answer. A. Transfer all of its insurer's insurance risk to another insurance entity. B. Indemnify it for some or all of the financial consequences of certain loss exposures covered by the insurer's policies. C. Confirm the adequacy of the premiums it charges to its insureds. D. Shift responsibility for claim handling to another insurance entity.

B. Indemnify it for some or all of the financial consequences of certain loss exposures covered by the insurer's policies.

The amount of risk retained by a primary insurer under its reinsurance program is influenced by Choose one answer. A. The reinsurer's financial strength. B. Reinsurer requirements for retention. C. The maximum policy limits written by the primary insurer. D. The primary insurer's exposure to extra-contractual obligations.

B. Reinsurer requirements for retention.

All of the following are sources of reinsurance, EXCEPT: Choose one answer. A. Reinsurance pools, syndicates, and associations B. The Brokers & Reinsurance Markets Association (BRMA) C. Professional reinsurers D. Reinsurance departments of primary insurers

B. The Brokers & Reinsurance Markets Association (BRMA)

One of the functions of reinsurance is to increase large-line capacity. Which one of the following best describes this function from the perspective of a primary insurer? Choose one answer. A. To reduce the financial consequences of a single catastrophic event that causes multiple losses B. To assume a loss exposure with potential financial consequences that are higher than its financial condition would otherwise permit C. To limit liability for a single loss that occurs over more than one policy period D. To withdraw from a market segment in a geographic area

B. To assume a loss exposure with potential financial consequences that are higher than its financial condition would otherwise permit

Which one of the following types of reinsurance treaties has the advantage of enabling a primary insurer to retain a larger proportion of the small loss exposures that are within its financial capability to absorb, while maintaining a safer and smaller retention on larger loss exposures? Choose one answer. A. Pro rata reinsurance B. Variable quota share C. Surplus share D. Excess of loss

B. Variable quota share

Reinsurance is best described as Choose one answer. A. A transfer of claim-payment responsibilities from a primary insurer to a reinsurer. B. An agreement between a primary insurer and a ceding company. C. An agreement by a reinsurer to indemnify a primary insurer for losses. D. A transfer of a primary insurer's retention to a reinsurer.

C. An agreement by a reinsurer to indemnify a primary insurer for losses.

Which one of the following types of excess of loss reinsurance is used primarily with liability insurance; applies the attachment point and the reinsurance limit separately to the losses occurring on each insurance policy; and is triggered when a loss on a policy exceeds the attachment point? Choose one answer. A. Per risk B. Aggregate C. Per policy D. Catastrophe

C. Per policy

Blue Sky Enterprises wants to join with a small group of other organizations to create an entirely new type of medical device for heart transplant patients. ABC Insurer is interested in working with the group to meet their insurance needs. However, ABC has no experience in the biotechnology field. Which function of reinsurance would be most beneficial to ABC Insurer? Choose one answer. A. Provide catastrophe protection B. Stabilize loss experience C. Provide underwriting guidance D. Increase large line capacity

C. Provide underwriting guidance

The senior management team at Primary Insurer must make a decision on how much reinsurance should be purchased and how much risk should be retained. The reinsurance program that senior management selects should reflect the risk tolerance of which one of the following? Choose one answer. A. The reinsurance company B. The insurer's claims adjusters C. The insurer's board of directors D. The reinsurer's stockholders

C. The insurer's board of directors

A replenishment of policyholders' surplus provided by the ceding commission paid to the primary insurer by the reinsurer is Choose one answer. A. A portfolio. B. The capacity ratio. C. Large-line capacity. D. Surplus relief.

D. Surplus relief.

An insurer just began operations in its state of domicile. The minimum surplus requirement is met and the insurer is ready to implement its business plan. It will specialize in workers compensation coverage because industry data is readily available and loss costs are provided by a rating organization. The investments behind the insurer's surplus are mostly short-term bonds, but it does have a fair amount invested in stocks. Market conditions are favorable for it to write business. With regard to determining reinsurance needs, which one of the following describes the consequences of moving its investments from short-term bonds to common stocks? Choose one answer. A. The insurer needs less reinsurance because investments in common stock yield a higher return than investments in short-term bonds. B. The insurer needs more reinsurance because moving its investments from short-term bonds to common stocks increases the insurer's underwriting risk. C. The insurer needs less reinsurance because common stock is readily marketable. D. The insurer needs more reinsurance because common stock is subject to wide market price

D. The insurer needs more reinsurance because common stock is subject to wide market price

Which one of the following is the primary business purpose of a professional reinsurer? Choose one answer. A. To offer reinsurance to affiliated insurers B. To create pools so that groups of insurers can share the loss exposures of the group C. To create a syndication of reinsurance intermediaries D. To serve insurers' reinsurance needs

D. To serve insurers' reinsurance needs

A key characteristic that distinguishes finite risk reinsurance from other types of reinsurance is that finite risk reinsurance Choose one answer. A. Places a finite limit on each occurrence. B. Includes a profit-sharing commission in addition to a flat ceding commission. C. Applies above a finite dollar amount or line. D. Transfers a limited amount of risk to the reinsurer.

D. Transfers a limited amount of risk to the reinsurer.

Which one of the following statements is true regarding the effect of the type of insurance sold on the reinsurance needs of a primary insurer? Choose one answer. A. The insurance products offered vary in loss stability which affects the primary insurer's ability to project loss experience. B. Because of the sheer volume of business, personal lines insurers need more reinsurance than do commercial lines insurers. C. A primary insurer that sells only a few types of insurance is more likely to have a stable loss ratio and less need for reinsurance. D. Underwriting risk is generally not a factor in the need for reinsurance because it is fairly stable among the various lines of insurance.

A. The insurance products offered vary in loss stability which affects the primary insurer's ability to project loss experience.

Which one of the following statements is correct regarding finite risk reinsurance? Choose one answer. A. Finite risk reinsurance is designed to cover high frequency and low severity loss exposures. B. Finite risk reinsurance agreements typically have a three to five year term. C. Finite risk reinsurance is less expensive than most traditional types of reinsurance. D. Finite risk reinsurance agreements generally allow the reinsurer to assess additional premium if losses exceed premium.

B. Finite risk reinsurance agreements typically have a three to five year term.

Which one of the following statements is correct regarding treaty reinsurance? Choose one answer. A. The integrity and experience of the primary insurer's management are generally not factors that treaty reinsurers consider. B. If treaty reinsurance agreements permitted primary insurers to choose which loss exposures they ceded, the reinsurer would be exposed to adverse selection. C. If reinsurers are comfortable with a primary insurer's published underwriting guidelines, they are generally not concerned with the degree to which those guidelines represent the insurer's actual practices. D. Primary insurers usually make treaty reinsurance agreements so their underwriters have discretion in using that reinsurance.

B. If treaty reinsurance agreements permitted primary insurers to choose which loss exposures they ceded, the reinsurer would be exposed to adverse selection.

Which one of the following statements is correct with regard to reinsurance agreements and their functions? Choose one answer. A. The reinsurance agreement alters the terms of the underlying insurance policies. B. The reinsurance agreement identifies the policy, group of policies, or other categories of insurance that are included in the agreement. C. The retention under a reinsurance agreement is always expressed as a percentage of the original amount of insurance. D. Reinsurers are prohibited from transferring part of the liability they have accepted under reinsurance agreements to other reinsurers.

B. The reinsurance agreement identifies the policy, group of policies, or other categories of insurance that are included in the agreement.

Which one of the following statements is correct with respect to excess of loss reinsurance? Choose one answer. A. The excess of loss reinsurer receives a proportional share of the subject premium. B. The reinsurer responds to a loss only when the loss exceeds the primary insurer's retention. C. Under a working cover type, the attachment point is set at a level where expected claims are retained. D. Reinsurers usually pay ceding commissions under excess of loss agreements.

B. The reinsurer responds to a loss only when the loss exceeds the primary insurer's retention.

Which one of the following statements is correct regarding treaty reinsurance? Choose one answer. A. The relationship between a primary insurer and its treaty reinsurer is typically limited to the one-year term of the reinsurance agreement. B. The price and terms of reinsurance treaties are standard with little negotiation between the parties. C. A long-term relationship with a reinsurer enables a primary insurer to consistently fulfill producers' requests for insurance. D. Treaty reinsurance agreements are usually designed to address a primary insurer's need to insure atypical risks.

C. A long-term relationship with a reinsurer enables a primary insurer to consistently fulfill producers' requests for insurance.

Which one of the following primary insurers would most likely use a catastrophe risk exchange as an alternative to traditional reinsurance? Choose one answer. A. A primary insurer looking for coverage in the event of an industry-wide loss B. A primary insurer in need of additional capital to expand into a new market C. A primary insurer with a geographic concentration of loss exposures D. A primary insurer seeking access to a prearranged line of credit

C. A primary insurer with a geographic concentration of loss exposures

Best Reinsurers assumes, under a treaty, all homeowners and personal auto business underwritten by Aurora Insurance Company. On occasion, Aurora will underwrite some homeowners policies with very high value homes. Aurora underwriters have been directed through their underwriting guidelines not to cede high value homes (as in the directive) to the treaty. Although the treaty does not expressly exclude this business, the directive was developed to protect the treaty from unusually high losses. If an application is submitted for a home that falls within the directive and Aurora does not wish to retain the entire risk, what is the best method of handling this submission? Choose one answer. A. Purchase another treaty and write the policy B. Decline the business for reinsurance reasons C. Purchase facultative reinsurance and write the policy D. Cede the policy to the existing treaty if the risk is acceptable

C. Purchase facultative reinsurance and write the policy

Which one of the following best describes why a group of insurers would choose to form a reinsurance pool, syndicate, or association? Choose one answer. A. To eliminate the need for any of the members to maintain a dedicated reinsurance department B. To avoid purchasing treaty reinsurance C. So that the members can share the loss exposures of the group, usually through reinsurance D. So that the members can deal with a direct writing reinsurer

C. So that the members can share the loss exposures of the group, usually through reinsurance

The ceding commission is paid by Choose one answer. A. The ceding company to the reinsurance broker. B. The reinsurance broker to the reinsurer. C. The reinsurer to the ceding company. D. The reinsurer to the reinsurance broker.

C. The reinsurer to the ceding company.

Reinsurers help primary insurers increase their large-line capacity by Choose one answer. A. Influencing regulations related to the maximum amount of insurance allowed. B. Supplementing primary insurers' earnings. C. Providing high layers of insurance above the underlying limits. D. Accepting liability for loss exposures that the primary insurer is unwilling or unable to retain.

D. Accepting liability for loss exposures that the primary insurer is unwilling or unable to retain.

Pro rata reinsurance is the appropriate choice when which one of the following is the main concern related to a primary insurer's rapid growth? Choose one answer. A. Catastrophic events B. Large line capacity C. Loss ratio instability D. Drain on policyholders' surplus

D. Drain on policyholders' surplus

Durham Insurance writes package policies for small to mid-size commercial properties. Durham has an excess of loss treaty reinsurance agreement with Wells Reinsurance which includes a profit-sharing arrangement. One of Durham's current policyholders has purchased a residential property with a swimming pool. While the treaty does not specifically exclude exposure for swimming pools, this is not an exposure that Durham typically covers and it would like to protect the treaty from the exposure. Which one of the following is the best way for Durham to handle this situation? Choose one answer. A. Durham Insurance should notify Wells Reinsurance of the atypical exposure and request that the exposure be included under the treaty. B. Durham Insurance should arrange for portfolio reinsurance for the high-hazard liability of the swimming pool and remove the exposure from the treaty. C. Durham Insurance should notify the policyholder that it will insure the new property for only sixty days, and that the policyholder will have to seek coverage through a specialty reinsurer. D. Durham Insurance should arrange for facultative reinsurance for the high-hazard liability of the swimming pool and remove the exposure from the treaty.

D. Durham Insurance should arrange for facultative reinsurance for the high-hazard liability of the swimming pool and remove the exposure from the treaty.

Smith Enterprises is a national plastics distributor with property values in excess of $20 million spread throughout the country. Smith Enterprises wants to insure all of its property exposures with the same insurer. Which function of reinsurance would be most beneficial to Smith's primary insurer? Choose one answer. A. Provide catastrophe protection B. Stabilize loss experience C. Provide underwriting guidance D. Increase large-line capacity

D. Increase large-line capacity

New Insurance Company noticed many insurers were withdrawing from the contractor's liability insurance market. The company believed this was a great opportunity to enter this market and earn substantial profits. New Insurance, however, lacked the experience and expertise to successfully market contractor's liability insurance, and their participation in this market was a dismal failure. New Insurance Company decided to formally withdraw from this market and to shift all future responsibility for contractor's liability claims to a reinsurer. What type of reinsurance is specifically designed to cover a whole class of business like New Insurance Company's contractor's liability insurance? Choose one answer. A. Facultative reinsurance B. Excess of loss reinsurance C. Surplus share reinsurance D. Portfolio reinsurance

D. Portfolio reinsurance

Which one of the following correctly describes a capital market instrument used by insurers to finance risk? Choose one answer. A. An industry loss warranty is an insurance-linked security that covers the primary insurer in the event that the industry-wide loss from a particular catastrophe exceeds a predetermined threshold. B. Finite risk reinsurance is a type of reinsurance in which the reinsurer's liability is limited and anticipated investment income is expressly acknowledged as an underwriting component. C. Under a catastrophe risk exchange, a bond is issued with the condition that if the issuer suffers a catastrophe greater than a specified amount, the obligation to pay interest and/or repay principal is deferred or forgiven. D. A catastrophe risk exchange is an agreement that gives the primary insurer the right to a cash payment from investors if a specified index of catastrophe losses by geographic area reaches a specified level.

A. An industry loss warranty is an insurance-linked security that covers the primary insurer in the event that the industry-wide loss from a particular catastrophe exceeds a predetermined threshold.

Which one of the following statements is correct regarding insurance regulatory constraints on growth? Choose one answer. A. From a regulator's perspective, if an insurer's ratio of written premium to policyholders' surplus exceeds 3 to 1, the insurer is selling more insurance than is prudent relative to the size of its net worth. B. State insurance regulation mandates that, for accounting purposes, premiums be recognized as revenue at the time a new policy is sold and expenses be recognized as they are earned over the policy's life. C. When an insurer's policyholders' surplus increases, that insurer's ability to grow its premium is diminished. D. State regulators prohibit reinsurers from providing primary insurers with payment for policy acquisition.

A. From a regulator's perspective, if an insurer's ratio of written premium to policyholders' surplus exceeds 3 to 1, the insurer is selling more insurance than is prudent relative to the size of its net worth.

Reinsurance pools, syndicates, and associations are Choose one answer. A. Groups of insurers that share the loss exposures of the group, usually through reinsurance. B. Professional development organizations for reinsurance intermediaries. C. Advisory organizations that provide information about primary insurers to reinsurers. D. Membership organizations in which reinsurers share statistical data.

A. Groups of insurers that share the loss exposures of the group, usually through reinsurance.

Which one of the following statements is correct regarding the impact of loss adjustment expenses in the selection of reinsurance program retentions and limits? Choose one answer. A. Loss adjustment expenses are generally added to the loss amount and should be carefully considered when selecting retentions and limits. B. Primary insurers with a concentration in one geographic area must carefully consider loss adjustment expenses when selecting retentions and limits. C. Loss adjustment expenses are generally pro rated between the primary insurer and reinsurer, and applied on top of retentions and limits. D. Primary insurers are responsible for all loss adjustment expenses, and they generally have little impact on the retentions and limits selected.

A. Loss adjustment expenses are generally added to the loss amount and should be carefully considered when selecting retentions and limits.

Beta Insurance Company (BIC) is a small, regional personal lines insurer. Four years ago, BIC hired a new Vice President of Marketing to grow the business. A combination of factors led to BIC growing by 30% in each of the past two years. The senior management team anticipates continued growth at this rate for another five years. Which one of the following types of reinsurance will be most effective in providing the surplus relief BIC will need to support its growth plans? Choose one answer. A. Pro rata B. Per policy excess of loss C. Per occurrence excess of loss D. Aggregate excess of loss

A. Pro rata

A catastrophe bond is typically issued with a condition that if the issuer suffers a catastrophe loss greater than a specified amount, then Choose one answer. A. The obligation to pay interest and/or principal is deferred or forgiven. B. The investors immediately receive a return of their principal. C. Investors earn relatively high interest rates. D. The investors must provide additional financial support of the insurer.

A. The obligation to pay interest and/or principal is deferred or forgiven.

Which one of the following is a benefit of contingent surplus notes as an alternative to traditional reinsurance? Choose one answer. A. They increase a primary insurer's assets without increasing its liabilities. B. The primary insurer may receive both a ceding commission and profit commission. C. They are linked to industry experience rather than that of the primary insurer. D. The investors assume a portion of the primary insurer's risk.

A. They increase a primary insurer's assets without increasing its liabilities.

Which one of the following best defines the term "direct writing reinsurer"? Choose one answer. A. A reinsurer that writes narrowly defined classes of business as directed by state insurance regulators B. A reinsurer whose employees deal directly with primary insurers C. A reinsurer that writes business under the direction of a reinsurance intermediary D. A reinsurer that sells reinsurance coverage directly to the insured

B. A reinsurer whose employees deal directly with primary insurers

Callaway Insurance Company is interested in gradually expanding its property insurance business into the wind-prone coastal areas of the southern U.S. In planning this expansion, on which one of the following goals should Calloway's reinsurance program most likely focus? Choose one answer. A. Large-line capacity B. Catastrophe protection C. Underwriting guidance D. Surplus relief

B. Catastrophe protection

A primary insurer that plans to grow is likely to need additional reinsurance for all of the following reasons, EXCEPT: Choose one answer. A. Growth usually causes a drain on policyholders' surplus. B. Growth could lead to geographic diversification of loss exposures. C. Variability of the loss ratio on new policies could cause instability of underwriting results. D. Growth could entail expanding into markets with greater coverage requirements.

B. Growth could lead to geographic diversification of loss exposures.

The maximum amount of insurance or limit of liability that an insurer will accept on a single loss exposures is called a Choose one answer. A. Loss limit. B. Line. C. Retrocession. D. Novation.

B. Line.

XYZ Insurer wants to start selling a new type of insurance for spacecraft. It has no experience in this area. Which function of reinsurance is most likely to be of value to XYZ Insurer? Choose one answer. A. Provide surplus relief B. Provide underwriting guidance C. Provide catastrophe protection D. Stabilize loss experience

B. Provide underwriting guidance

A primary insurer is able to obtain surplus relief through reinsurance by Choose one answer. A. Obtaining underwriting advice from a reinsurer to increase underwriting profit. B. Receiving ceding commissions to offset policy acquisition expenses. C. Minimizing fluctuations in retained losses from year to year. D. Reducing large line capacity to minimize the ratio of net written premium to policyholders' surplus.

B. Receiving ceding commissions to offset policy acquisition expenses.

Which one of the following statements is correct regarding sources of reinsurers? Choose one answer. A. Primary insurers dealing with direct writing reinsurers generally use a single reinsurer for all of their needs. B. Reinsurance intermediaries can often help secure high coverage limits and catastrophe coverage. C. Reinsurance intermediaries generally have access only to the domestic reinsurance market. D. Reinsurance intermediaries generally represent professional reinsurers and receive a brokerage commission from the primary insurers.

B. Reinsurance intermediaries can often help secure high coverage limits and catastrophe coverage.

Which one of the following statements is correct with regard to the use of facultative reinsurance? Choose one answer. A. Facultative reinsurance is generally not an option for insuring loss exposures that are inconsistent with the primary insurer's typical portfolio. B. The treaty reinsurer is usually willing to allow the primary insurer to remove high-hazard loss exposures from the treaty by using facultative reinsurance. C. The administrative costs associated with placing facultative reinsurance are relatively low. D. Facultative reinsurance is generally not an option for insuring classes of loss exposures that are excluded under treaty reinsurance.

B. The treaty reinsurer is usually willing to allow the primary insurer to remove high-hazard loss exposures from the treaty by using facultative reinsurance.

Which one of the following is true regarding sidecar arrangements as an alternative to traditional and non-traditional reinsurance? Choose one answer. A. Sidecars are a means through which a primary insurer can exchange a portion of its insurance risk for another insurer's insurance risk. B. Under these arrangements, the primary insurer charges a ceding commission and may receive a profit commission if the book of business is profitable. C. Sidecars have a strike price at which the primary insurer will be able to receive cash from its investors to enable it to pay losses from a catastrophe. D. Under a sidecar arrangement, investors receive their return for the risk assumed through periodic interest payments on the principal amount assumed.

B. Under these arrangements, the primary insurer charges a ceding commission and may receive a profit commission if the book of business is profitable.

Big Insurance Company (BIC) has a six-line surplus share reinsurance treaty with Large Reinsurance Company (LRC), with BIC retaining $100,000. BIC has a customer with a policy limit of $500,000 and a premium amount of $2,000. How much of the premium will go to LRC as part of the surplus share reinsurance treaty? Choose one answer. A. $400 B. $1,500 C. $1,600 D. $1,667

C. $1,600

Greatview Insurance has only been in business for five years and has limited capital. It would like to grow its book by expanding into the general liability market. Senior management is concerned with the difficulty in forecasting loss amounts and the loss adjustment expenses associated with liability losses. They decide that they need to expand with caution and limit Greatview's exposure through reinsurance. Which one of the following reinsurance arrangements would allow Greatview to proportionally share the liability limits, premium, losses, and loss adjustment expenses with a reinsurer, and also provide surplus relief? Choose one answer. A. A 20% quota share treaty B. A catastrophe excess of loss treaty C. A 70% quota share treaty D. A two-line surplus share treaty with a $250,000 line

C. A 70% quota share treaty

Which one of the following types of reinsurance is generally chosen by newly incorporated insurers or insurers with limited capital because it is effective in providing surplus relief? Choose one answer. A. Facultative B. Aggregate excess C. Pro rata D. Per risk

C. Pro rata

Treaty reinsurance is best described as a reinsurance agreement Choose one answer. A. In which the primary insurer chooses which loss exposures to submit to the reinsurer, and the reinsurer must accept all loss exposures submitted. B. In which the primary insurer chooses which loss exposures to submit to the reinsurer, and the reinsurer can accept or reject any loss exposures submitted. C. That covers an entire class or portfolio of loss exposures, and all loss exposures that fall within the treaty are automatically reinsured. D. That covers an entire class or portfolio of loss exposures, and the reinsurer can typically accept or reject any loss exposures submitted.

C. That covers an entire class or portfolio of loss exposures, and all loss exposures that fall within the treaty are automatically reinsured.

Which one of the following statements is correct with respect to pro rata reinsurance? Choose one answer. A. Pro rata reinsurance is available in five forms including per risk, catastrophe, per policy, per occurrence, and aggregate excess. B. The primary insurer and the reinsurer do not typically use a fixed percentage in sharing the amounts of insurance, premiums, and losses. C. The reinsurer usually pays a ceding commission to reimburse the primary insurer for acquisition costs associated with the underlying policies. D. These agreements generally share only loss amounts under covered policies and exclude loss adjustment expenses related to the policies.

C. The reinsurer usually pays a ceding commission to reimburse the primary insurer for acquisition costs associated with the underlying policies.

Westfork Insurance has a surplus share treaty with Durham Reinsurance and retains a line of $50,000. The treaty contains nine lines. Which one of the following represents that maximum amount of coverage Westfork can write for a single building under the treaty? Choose one answer. A. $50,000 B. $250,000 C. $450,000 D. $500,000

D. $500,000

A facultative reinsurance agreement is written for a specified time period Choose one answer. A. But can be cancelled at any point during that period by the reinsurer for any reason, provided adequate notice is provided to the primary insurer. B. And cannot be cancelled without the express written permission of the insured whose coverage is the subject of the agreement. C. But can be cancelled at any time by the primary insurer. D. And cannot be cancelled by either party unless contractual obligations, such as payment of premiums, are not met.

D. And cannot be cancelled by either party unless contractual obligations, such as payment of premiums, are not met.

Which one of the following would be most likely to be a factor affecting the selection of a retention by a primary insurer in its reinsurance program? Choose one answer. A. Extra-contractual obligations B. Clash cover C. Catastrophe exposure D. Co-participation provision

D. Co-participation provision

An established regional commercial property insurer decides to increase its market share by 20% per year over the next three years. Currently, the insurer is experiencing a premium-to-surplus ratio of 4 to 1. Which one of the following types of reinsurance treaties will be most effective in providing the insurer with needed surplus relief? Choose one answer. A. Surplus share B. Per policy excess of loss C. Per occurrence excess of loss D. Quota share

D. Quota share