Minnesota Reinsurance Specialist
Certification Exam Practice Questions
And Correct Answers (Verified Answers)
Plus Rationales 2026 Q&A | Instant
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1. What is the primary purpose of reinsurance?
A. To eliminate insurance regulation
B. To transfer risk from insurer to reinsurer
C. To increase policy premiums directly
D. To replace primary insurance contracts
Answer: B
Rationale: Reinsurance allows an insurer to transfer portions of risk
to another insurer to reduce exposure and stabilize financial results.
2. Which type of reinsurance covers a specific policy or risk individually?
A. Treaty reinsurance
B. Facultative reinsurance
C. Proportional reinsurance
, D. Automatic reinsurance
Answer: B
Rationale: Facultative reinsurance is arranged separately for each
individual risk or policy.
3. What best describes a quota share treaty?
A. Reinsurer pays only catastrophic losses
B. Insurer and reinsurer share premiums and losses in fixed
percentages
C. Coverage applies only above a retention limit
D. Coverage applies only to life insurance
Answer: B
Rationale: In quota share treaties, premiums and losses are shared
proportionally.
4. What is surplus reinsurance?
A. A fixed percentage sharing agreement
B. A form of excess coverage above insurer retention
C. A treaty for marine insurance only
D. A regulatory penalty structure
Answer: B
Rationale: Surplus reinsurance covers amounts above the insurer’s
retention on a per-risk basis.
5. What does “ceding company” mean?
A. The reinsurer receiving risk
, B. The insurer transferring risk
C. The regulator overseeing contracts
D. The policyholder purchasing insurance
Answer: B
Rationale: The ceding company is the insurer that passes risk to the
reinsurer.
6. What is retrocession?
A. Primary insurance underwriting
B. Reinsurance of reinsurance
C. Direct insurance sales
D. Policy cancellation
Answer: B
Rationale: Retrocession is when a reinsurer transfers risk to another
reinsurer.
7. What is the main purpose of excess of loss reinsurance?
A. Share all premiums equally
B. Cover losses above a specified threshold
C. Eliminate underwriting risk entirely
D. Replace insurance contracts
Answer: B
Rationale: Excess of loss reinsurance protects insurers from large
individual or aggregate losses.
, 8. Which risk is most suited for facultative reinsurance?
A. Small homogeneous risks
B. Large or unusual individual risks
C. Government-backed risks
D. Group life policies only
Answer: B
Rationale: Facultative reinsurance is typically used for unique or
high-value risks.
9. What is a treaty in reinsurance?
A. A single-risk agreement
B. A standing agreement covering multiple risks
C. A legal dispute resolution method
D. A regulatory filing requirement
Answer: B
Rationale: A treaty is an agreement where reinsurer accepts a
portfolio of risks automatically.
10. What is the insurer’s retained limit?
A. The amount ceded to reinsurer
B. The portion of risk the insurer keeps
C. The total policy premium
D. The reinsurer’s liability cap
Answer: B
Certification Exam Practice Questions
And Correct Answers (Verified Answers)
Plus Rationales 2026 Q&A | Instant
Download Pdf
1. What is the primary purpose of reinsurance?
A. To eliminate insurance regulation
B. To transfer risk from insurer to reinsurer
C. To increase policy premiums directly
D. To replace primary insurance contracts
Answer: B
Rationale: Reinsurance allows an insurer to transfer portions of risk
to another insurer to reduce exposure and stabilize financial results.
2. Which type of reinsurance covers a specific policy or risk individually?
A. Treaty reinsurance
B. Facultative reinsurance
C. Proportional reinsurance
, D. Automatic reinsurance
Answer: B
Rationale: Facultative reinsurance is arranged separately for each
individual risk or policy.
3. What best describes a quota share treaty?
A. Reinsurer pays only catastrophic losses
B. Insurer and reinsurer share premiums and losses in fixed
percentages
C. Coverage applies only above a retention limit
D. Coverage applies only to life insurance
Answer: B
Rationale: In quota share treaties, premiums and losses are shared
proportionally.
4. What is surplus reinsurance?
A. A fixed percentage sharing agreement
B. A form of excess coverage above insurer retention
C. A treaty for marine insurance only
D. A regulatory penalty structure
Answer: B
Rationale: Surplus reinsurance covers amounts above the insurer’s
retention on a per-risk basis.
5. What does “ceding company” mean?
A. The reinsurer receiving risk
, B. The insurer transferring risk
C. The regulator overseeing contracts
D. The policyholder purchasing insurance
Answer: B
Rationale: The ceding company is the insurer that passes risk to the
reinsurer.
6. What is retrocession?
A. Primary insurance underwriting
B. Reinsurance of reinsurance
C. Direct insurance sales
D. Policy cancellation
Answer: B
Rationale: Retrocession is when a reinsurer transfers risk to another
reinsurer.
7. What is the main purpose of excess of loss reinsurance?
A. Share all premiums equally
B. Cover losses above a specified threshold
C. Eliminate underwriting risk entirely
D. Replace insurance contracts
Answer: B
Rationale: Excess of loss reinsurance protects insurers from large
individual or aggregate losses.
, 8. Which risk is most suited for facultative reinsurance?
A. Small homogeneous risks
B. Large or unusual individual risks
C. Government-backed risks
D. Group life policies only
Answer: B
Rationale: Facultative reinsurance is typically used for unique or
high-value risks.
9. What is a treaty in reinsurance?
A. A single-risk agreement
B. A standing agreement covering multiple risks
C. A legal dispute resolution method
D. A regulatory filing requirement
Answer: B
Rationale: A treaty is an agreement where reinsurer accepts a
portfolio of risks automatically.
10. What is the insurer’s retained limit?
A. The amount ceded to reinsurer
B. The portion of risk the insurer keeps
C. The total policy premium
D. The reinsurer’s liability cap
Answer: B
