Which of the following best describes the role of the 'attachment point' in non-proportional reinsurance?

medium Q5 of 15

Insurance Awareness - Reinsurance

AIt is the maximum amount the reinsurer will pay.

BIt is the minimum loss amount above which the reinsurer becomes liable.

CIt is the percentage of premium ceded to the reinsurer.

DIt is the fixed commission paid to the insurer.

Step-by-Step Solution

Step 1: Understand attachment point
The attachment point is the loss amount threshold above which the reinsurer starts paying claims in non-proportional reinsurance.
Step 2: Analyze options
It is the minimum loss amount above which the reinsurer becomes liable. correctly defines the attachment point, while other options describe unrelated concepts.
Final Answer:
It is the minimum loss amount above which the reinsurer becomes liable. → Option B
Quick Check:
This is a fundamental concept in non-proportional reinsurance.

Quick Trick: Attachment point = Loss threshold for reinsurer liability.

Common Mistakes:

MISTAKES

Master "Reinsurance" in Insurance Awareness

Start learning the concept with an interactive lesson.

Want More Practice?

15+ quiz questions · All difficulty levels · Free

More Insurance Awareness Quizzes