SOFA-CFE · Question #329
A retrocession is a transaction whereby a reinsurer, called the retrocedent, cedes to another reinsurer, known as the retrocessionaire.
The correct answer is A. True. Retrocession is indeed the process by which a reinsurer (the retrocedent) transfers some of its assumed risk to yet another reinsurer (the retrocessionaire), making option A correct - this is the standard industry definition with no ambiguity. Option B is wrong because the…
Question
A retrocession is a transaction whereby a reinsurer, called the retrocedent, cedes to another reinsurer, known as the retrocessionaire.
Options
- ATrue
- BFalse
How the community answered
(49 responses)- A82% (40)
- B18% (9)
Explanation
Retrocession is indeed the process by which a reinsurer (the retrocedent) transfers some of its assumed risk to yet another reinsurer (the retrocessionaire), making option A correct - this is the standard industry definition with no ambiguity.
Option B is wrong because the statement is a precise, factual definition; there is nothing false about it - both the terminology and the directional flow of risk (ceded from retrocedent to retrocessionaire) are accurate.
Memory tip: Think of it as reinsurance of reinsurance - the prefix retro signals "going back a layer." Visualize a chain: insured → insurer → reinsurer (retrocedent) → retrocessionaire. Each link passes risk further back, with "retro" marking the second handoff.
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