Reinsurance Question Paper

Reinsurance

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2007

KENYATT A UNIVERSITY
UNIVERSITY EXAMINATIONS 2007/2008
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
BMS
.
312: REINSURANCE
..................................................
DATE: Thursday 6th December 2007
TIME: 2.00pm - 4.00pm
INSTRUCTIONS
•
Attempt question one (COMPULSORY) and any other four.
•
Explain your answers clearly.
1.
XYZ insurance company has worked hard in the area of marketing and structuring for the last two areas. Their efforts have started paying back and they are having a good business experience at the time. The company's head of risk in his report informed
the company authorities that they need Reinsurance to the risks written.

Required:-
i) Why should XYZ company give a way its hard earned business to another company in the name of reinsurance? ( 10 mks)
ii) From the risk manager's report facultative reinsurance was proposed as only among other types of reinsurance. Clearly explain what you understand by facultative reinsurance? When is it appropriate to use Facultative reinsurance.( 15 mks)
iii) What are the disadvantages of Facultative Reinsurance? (5 mks)

2.
I) Discuss the buyers of reinsurance products. ( 5 mks)
ii) How does a reinsurance broker acquire business? (5 mks)

3.
I) Discuss retention in details. (5 mks)
ii) Explain the factors which influence retention. ( 5 mks)

4.
What are the financial and economic implications of reinsurance? ( 10 mks)

5.
Rating is a central process in the reinsurance practice. Discuss relevant factors in a rating process. ( 10 mks)

6.
Reinsurance requires Contractual Documentation and certainty. Explain the documents and their relationships. ( 10 mks)

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