ACE Reinsurance & Treaty Concepts Flashcards
6 cards from real ACE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 ACE Reinsurance & Treaty Concepts flashcards as text
Under a surplus share treaty, what determines the amount of risk ceded to the reinsurer?
Answer: The amount by which the policy limit exceeds the cedant's retention line
In a surplus share treaty the ceded amount equals the policy limit minus the cedant's retained 'line,' with the reinsurer covering the surplus portion.
What is a 'loss corridor' in an aggregate reinsurance structure?
Answer: A band of aggregate losses retained by the cedant between two reinsurer layers
A loss corridor is a layer of aggregate losses sandwiched between two reinsurance covers that the cedant must absorb itself.
Which term describes the primary insurer's share of risk that it retains and does not cede to a reinsurer?
Answer: Net retained line
The net retained line (or net retention) is the portion of each risk the cedant keeps for its own account after ceding the rest.
What is retrocession in the context of reinsurance?
Answer: A reinsurer ceding part of its assumed risk to another reinsurer
Retrocession occurs when a reinsurer (the retrocedant) itself purchases reinsurance to further spread the risk it has accepted.
In an excess-of-loss per-risk treaty, what does the 'attachment point' represent?
Answer: The loss amount the cedant must retain before the reinsurer's coverage applies
The attachment point (or retention) is the dollar threshold the cedant bears on any single risk before excess-of-loss coverage is triggered.
Which ACORD standard message set is specifically designed for the exchange of reinsurance accounting and settlement data?
Answer: ACORD REIN (800-series XML messages)
The ACORD 800-series XML messages provide standardized formats for reinsurance accounting, claims, and contract data exchange.