____________________ are those premiums arising from policies which an insurer accepts, in part or in whole (as the reinsurer), from another insurance company.

Question

Options

• AAssumed reinsurance premiums
• BUnearned premiums
• CMortgage Insurance premiums
• DMinimum reserve premiums

• A
  84% (31)
• B
  8% (3)
• C
  3% (1)
• D
  5% (2)

Explanation

Assumed reinsurance premiums are correct because the term "assumed" refers to an insurer taking on (assuming) risk that originated with another insurance company - when a reinsurer accepts premiums from a ceding insurer, those are called assumed reinsurance premiums, as opposed to "ceded" premiums from the original insurer's perspective.

Why the distractors are wrong:

• B. Unearned premiums are the portion of a collected premium that applies to future coverage periods not yet elapsed - unrelated to the reinsurance relationship.
• C. Mortgage insurance premiums are fees paid to protect lenders against borrower default on home loans - a completely separate product line.
• D. Minimum reserve premiums are not a standard industry term; reserves relate to funds set aside for future claims, not to premium origination from another insurer.

Memory tip: Think of "assumed" like assuming a responsibility from someone else - the reinsurer assumes (takes over) the risk and its associated premiums from the original insurer. The ceding company gives away risk; the reinsurer assumes it.

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