CII London Market (LM2) Insurance Practice Test 2026

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards

From $12.50Unlock all

Session length

1 / 20

In a claim settled for £480,000, how much would the reinsurer A cover if the insurer retains £300,000 and reinsurer A covers the next layer of £200,000?

The entire claim amount

The insurer would cover £300,000, reinsurer A £180,000, reinsurer B nothing

In this scenario, understanding how reinsurance works is crucial. The insurer retains a portion of the claim amount, which is £300,000 in this case. Reinsurer A has agreed to cover the next layer of £200,000 after the insurer's retention.

The total claim is £480,000. After the insurer pays their retained amount of £300,000, there is still £180,000 remaining from the claim amount that needs to be covered. Since reinsurer A is responsible for covering the next £200,000 only after the insurer's retention, they will cover £180,000 and not the full £200,000 as the claim does not exceed £480,000.

Thus, the breakdown is:

- The insurer pays £300,000.

- Reinsurer A then pays £180,000 to cover part of the remaining claim amount.

- Reinsurer B does not come into play here because reinsurer A covers all of the available layer they are responsible for, and there would be no claim left for reinsurer B to address.

This understanding supports the conclusion that the insurer covers £300,000, reinsurer A covers £180,000, and reinsurer B covers nothing in this particular claim

Insurer A would cover £480,000

Insurer would cover £300,000 and reinsurer A £200,000