CII M97 Practice Questions - CII M97 Reinsurance Exam - CII M97 Practice Questions

Question 1

What is the primary commercial function of reinsurance for a primary insurance company?

To completely eliminate the need for primary insurers to hold regulatory solvency capital. To transfer insurance risk to enable the primary insurer to increase underwriting capacity and stabilize earnings. To issue insurance policies directly to commercial policyholders on behalf of reinsurers. To guarantee that policyholders receive dividend payouts regardless of insurer loss experience.

Correct Answer:

To transfer insurance risk to enable the primary insurer to increase underwriting capacity and stabilize earnings.

Question 2

In a standard reinsurance arrangement, what is the legal relationship between the original insured policyholder and the reinsurer?

The insured has direct privity of contract with the reinsurer and can sue the reinsurer directly for claim payments. The reinsurer becomes a co-insurer of the original risk jointly liable with the primary insurer. There is no privity of contract between the original insured and the reinsurer; the insurance and reinsurance contracts are legally distinct. The reinsurer assumes full legal responsibility for primary policy administration and claims handling.

Correct Answer:

There is no privity of contract between the original insured and the reinsurer; the insurance and reinsurance contracts are legally distinct.

Question 3

Which entity acts as an intermediary representing the ceding insurer to negotiate terms and place reinsurance in the market?

Direct reinsurer Retrocessionaire Reinsurance broker Managing general agent (MGA)

Correct Answer:

Reinsurance broker

Question 4

What is the term given to a transaction where a reinsurer cedes a portion of its accepted reinsurance risk to another reinsurer?

Fronting Retrocession Co-insurance Subrogation

Correct Answer:

Retrocession

Question 5

Which statement accurately describes Facultative Reinsurance?

It is an obligatory contract covering an entire portfolio of policies automatically. It is negotiated on an individual risk basis, where the ceding insurer is free to offer and the reinsurer is free to accept or decline. It only applies to catastrophic non-proportional loss layers. It requires annual aggregate financial audits before claims can be settled.

Correct Answer:

It is negotiated on an individual risk basis, where the ceding insurer is free to offer and the reinsurer is free to accept or decline.

Question 1

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Prepare with the CII M97 Practice Questions - CII M97 Reinsurance Exam practice quiz. This question bank includes 100 questions covering treaty, reinsurance, insurer, loss, and reinsurer. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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CII M97 Practice Questions - CII M97 Reinsurance Exam

This practice set contains 100 questions from the matching question bank and focuses on treaty, reinsurance, insurer, loss, and reinsurer. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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CII M97 Practice Questions - CII M97 Reinsurance Exam

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