CPCU 540 Ch. 10

Question 1

The ability of an insurer to meet its financial obligations as they become due, even those resulting from insured losses that may be claimed several years in the future

Answer 1

Solvency

Question 2

The transfer of insurance risk from one insurer to another through a contractual agreement under which one insurer (the reinsurer) agrees, in return for a reinsurance premium, to indemnify another insurer (the primary insurer) for some or all of the financial consequences of certain loss exposures covered by the primary’s insurance policies

Answer 2

Reinsurance

Question 3

A type of retroactive plan that applies to an entire portfolio of losses

Answer 3

Loss portfolio transfer

Question 4

The proportion of a company’s earnings or net income paid out as dividends to shareholders

Answer 4

Payout ratio