Alberta General Insurance Level 1 Practice Exam

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Ace your Alberta General Insurance Level 1 Exam with our comprehensive practice quiz. Tailored to mimic the real test, our quiz offers detailed explanations, expert tips, and all you need to succeed. Start your path to becoming a licensed professional today!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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How does non-proportional reinsurance determine the reinsurer's portion of loss?

Based on a fixed percentage
Depends on the total number of claims
Depends on the size of the loss
Based on the initial premium paid

The correct answer is: Depends on the size of the loss

Non-proportional reinsurance is a type of reinsurance in which the reinsurer's portion of the loss is not determined by a fixed percentage, unlike proportional reinsurance. It is calculated based on the size of the loss, meaning that the reinsurer will only cover losses that exceed a certain threshold. This allows the reinsurer to limit their exposure and only cover larger and more catastrophic losses, rather than smaller and more frequent ones. Option A is incorrect because it implies that non-proportional reinsurance is based on a fixed percentage. Option B is incorrect because it only takes into account the number of claims and not the size of the loss. Option D is incorrect because the initial premium paid does not necessarily determine the reinsurer's portion of the loss in non-proportional reinsurance. Therefore, C is the most accurate and relevant choice.