AFSB 151 STUDY GUIDE 2026 ACCURATE
QUESTION SET AND CORRECT ANSWERS
◉ large-line capacity.
Answer: an insurer's ability to provide larger amounts of insurance
for property loss exposures, or higher limits of liability for liability
loss exposures, than it is otherwise willing to provide
◉ professional reinsurer.
Answer: an insurer whose primary business purpose is serving
other insurers' reinsurance needs
◉ reinsurance intermediary.
Answer: an intermediary that works with primary insurers to
develop reinsurance programs and that negotiates contracts of
reinsurance between the primary insurer and reinsurer, receiving
commission for placement and other services rendered
◉ reinsurane agreement.
Answer: contract between the primary insurer and reinsurer that
stipulates the form of reinsurance and the type of accounts to be
reinsured
,◉ retention.
Answer: the amount retained by the primary insurer in the
reinsurance transaction
◉ ceding commission.
Answer: an amount paid by the reinsurer to the primary insurer to
cover part of all of the primary insurer's policy acquisition expenses
and other costs
◉ retrocession.
Answer: a reinsurance agreement whereby one reinsurer (the
retrocedent) transfers all or part of the reinsurance risk it has
assumed or will assume to another reinsurer (the retrocessionaire)
◉ policyholders' surplus.
Answer: an insurer's assets minus its liabilities, which represents its
net worth
◉ catastrophe.
Answer: a single event that caused widespread losses
◉ capacity ratio (premium-to-surplus ratio).
Answer: a leverage ratio that indicates an insurer's financial
strength by relation net written premiums to policyholders' surplus
, ◉ surplus relief.
Answer: a replenishment of policyholders' surplus provided by the
ceding commission paid to the primary insurer by the reinsurer
◉ portfolio reinsurance.
Answer: reinsurance that transfers to the reinsurer liability for an
entire type of insurance, territory, or book of business after the
primary insurer has issued the policies
◉ treaty reinsurance.
Answer: a reinsurance agreement that covers an entire class or
portfolio of loss exposures and provides that the primary insurer's
individual loss exposures that fall within the treaty are automatically
reinsured
◉ facultative reinsurance.
Answer: reinsurance of individual loss exposures in which the
primary insurer chooses which loss exposures to submit the the
reinsurer, and the reinsurer can accept or reject any loss exposures
submitted
◉ facultative certificate of reinsurance.
QUESTION SET AND CORRECT ANSWERS
◉ large-line capacity.
Answer: an insurer's ability to provide larger amounts of insurance
for property loss exposures, or higher limits of liability for liability
loss exposures, than it is otherwise willing to provide
◉ professional reinsurer.
Answer: an insurer whose primary business purpose is serving
other insurers' reinsurance needs
◉ reinsurance intermediary.
Answer: an intermediary that works with primary insurers to
develop reinsurance programs and that negotiates contracts of
reinsurance between the primary insurer and reinsurer, receiving
commission for placement and other services rendered
◉ reinsurane agreement.
Answer: contract between the primary insurer and reinsurer that
stipulates the form of reinsurance and the type of accounts to be
reinsured
,◉ retention.
Answer: the amount retained by the primary insurer in the
reinsurance transaction
◉ ceding commission.
Answer: an amount paid by the reinsurer to the primary insurer to
cover part of all of the primary insurer's policy acquisition expenses
and other costs
◉ retrocession.
Answer: a reinsurance agreement whereby one reinsurer (the
retrocedent) transfers all or part of the reinsurance risk it has
assumed or will assume to another reinsurer (the retrocessionaire)
◉ policyholders' surplus.
Answer: an insurer's assets minus its liabilities, which represents its
net worth
◉ catastrophe.
Answer: a single event that caused widespread losses
◉ capacity ratio (premium-to-surplus ratio).
Answer: a leverage ratio that indicates an insurer's financial
strength by relation net written premiums to policyholders' surplus
, ◉ surplus relief.
Answer: a replenishment of policyholders' surplus provided by the
ceding commission paid to the primary insurer by the reinsurer
◉ portfolio reinsurance.
Answer: reinsurance that transfers to the reinsurer liability for an
entire type of insurance, territory, or book of business after the
primary insurer has issued the policies
◉ treaty reinsurance.
Answer: a reinsurance agreement that covers an entire class or
portfolio of loss exposures and provides that the primary insurer's
individual loss exposures that fall within the treaty are automatically
reinsured
◉ facultative reinsurance.
Answer: reinsurance of individual loss exposures in which the
primary insurer chooses which loss exposures to submit the the
reinsurer, and the reinsurer can accept or reject any loss exposures
submitted
◉ facultative certificate of reinsurance.
