RMI Exam 3| 100 Questions| Answers| Accurate

RMI Exam 3| 100 Questions| Answers| Accurcentralize loss retention - ANSWER because an organization is able to insure all of its subsidiaries with the same pure captive, it is more likely to be able to a long-term relationship with a reinsurer enables a primary insurer to consistently fulfill producers' requests for insurance - ANSWER which one of the following statements is correct regarding treaty reinsurance collects premiums. issues policies, and pays covered losses - ANSWER a captive insurer the severity of losses transferred to captives is generally low to medium - ANSWER one characteristic of captive insurance plans is that the IRS requires an arm's length relationship for premiums to be deductible - ANSWER one reason that a parent company must moderate its pressure on a captive to insure in an economically advantageous fashion is that are usually part of a hybrid risk financing plan - ANSWER captive insurers insurance risk - ANSWER insurance companies face the uncertainty that the premiums they have collected will not be adequate to pay the losses. This uncertainty is called portfolio reinsurance - ANSWER 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? Most treaties require that all loss exposures within the treaty's terms be reinsured - ANSWER Which one of the following statements is correct regarding the use of treaty and facultative reinsurance reinsurance agreement - ANSWER usually requires the primary insurer to retain part of its original liability The reinsurer typically does not assume all of the primary insurer's insurance risk increase large line capacity - ANSWER PI can assume more significant risks than its financial condition and regulations would otherwise permit maximum amount of insurance or limit of liability allowed by insurance regulations, which prohibit an insurer from retaining more than 10 percent of its policyholders' net worth on any one loss exposure provide surplus relief - ANSWER State insurance regulators monitor several financial ratios as part of their solvency surveillance efforts, but the relationship of written premiums to policyholders' surplus is generally, a key financial ratio and one considered to ate