SOFA-CFE · Question #276
The price charged by the reinsurer under such a contract that represents reinsurance premium commonly known as:
The correct answer is B. treaty. Option B (treaty) is correct because a reinsurance contract is formally called a reinsurance treaty, and the price charged by the reinsurer under such a contract is the reinsurance premium - the term "treaty" is the standard industry term for the reinsurance agreement itself…
Question
The price charged by the reinsurer under such a contract that represents reinsurance premium commonly known as:
Options
- Aagreement
- Btreaty
- Csettlement
- Dtreasury
How the community answered
(35 responses)- A17% (6)
- B71% (25)
- C9% (3)
- D3% (1)
Explanation
Option B (treaty) is correct because a reinsurance contract is formally called a reinsurance treaty, and the price charged by the reinsurer under such a contract is the reinsurance premium - the term "treaty" is the standard industry term for the reinsurance agreement itself, making it the natural pairing with "reinsurance premium."
Why the distractors are wrong:
- A. Agreement - While a treaty is a type of agreement, "agreement" is too generic and not the specific industry term used for reinsurance contracts.
- C. Settlement - A settlement refers to the resolution of a claim or dispute, not the pricing structure of a reinsurance contract.
- D. Treasury - Treasury relates to government debt instruments or corporate finance functions, entirely unrelated to reinsurance pricing.
Memory tip: Think of international diplomacy - countries sign treaties with each other, just as insurance companies (cedants) sign reinsurance treaties with reinsurers. The "price" of that treaty relationship is the reinsurance premium.
Community Discussion
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