Exam 7 Practice Question 8
Study guide: Exam 7
Determine which of the following statements about types of reinsurance are true.
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I. The most important characteristic of treaty reinsurance is that the reinsurer underwrites each risk ceded to it, which protects it from adverse selection.
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II. Under a surplus share treaty, a loss smaller than the ceding company's retained line is still partly ceded when the policy's limit exceeds the retained line.
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III. Aggregate excess of loss reinsurance generally applies to the ceding company's net retention, with its other reinsurance inuring to the benefit of the aggregate cover.
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A) I only
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B) I and II only
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C) I and III only
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D) II and III only
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E) The answer is not given by (A), (B), (C), or (D)
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