E-Learning

Question 1

Reinsurance Contract Certainty is important because:

The Regulator makes it mandatory

It is an integral part of good risk management for insurers and reinsurers

It is required for proper pricing of reinsurance contracts

It helps reinsurers make their underwriting decisions

Question 2

To achieve contract certainty at the time of entering into a Facultative reinsurance contract, the cedant and reinsurer should have:

A full reinsurance slip that is duly signed by the parties

Clear, documented communications between themselves establishing terms unambiguously. Need not necessarily have a reinsurance slip

A broker-produced cover note

Paid and received the reinsurance premium respectively

Question 3

What happens if a contract is not considered certain at inception?

The broker of the reinsurance contract will bear the risk of lack of contract certainty

The parties to the contract need to explain to the CCA / MAS why it failed contract certainty

The parties to the contract should take efforts to make the contract certain as soon as possible

The parties to the contract should take efforts to make the contract certain as soon as possible and should once again report through the portal once it is contract certain

Question 4

Reinsurance Contract certainty principles should be met by the following parties in Singapore:

All Reinsurers and Reinsureds based in Singapore

All Insurers, Reinsurers and Reinsureds based in Singapore

All Reinsurers regulated by MAS

All Reinsurance Brokers, Reinsurers and Insurers regulated by MAS

Question 5

A reinsurance treaty incepts on 1st January 2021. Final terms were only agreed on 5th January 2021 and the reinsurers’ lines were bound on 6th January 2021. By when should the documents be signed by the parties, for satisfying contract certainty requirements:

6th January 2021

5th February 2021

31st January 2021

1st February 2021

Question 6

A reinsurance contract was bound on 1st May. When should the contract certainty status of this contract be reported on the portal?

In the month of May

In the month of June

Anytime between 1st July and 31st July

Anytime from 1st May to 30th June

Question 7

A checklist is important for determining whether a contract is contract certain or not. The checklist should be as provided in the CCA website:

Yes

No, it can be different based on the company’s needs

It needs to be different, based on whether the contract is Facultative or Treaty

Depends on the experience of the personnel managing contract certainty reporting

Question 8

A reinsurance broker issuing an evidence of cover to the ceding company needs to provide this to fulfil contract certainty requirements:

Names of reinsurers and their shares of participation in the contract

Latest rating of the reinsurers participating in the contract

Premiums due to each reinsurer on the contract

Claims payment procedures agreed with each reinsurer

Question 9

A reinsurer imposes a subjectivity while indicating their written line - ‘subject to no deterioration in loss experience’. The cover is bound without any further communication on this subjectivity. Is contract certainty achieved?

Yes

No

Yes, because there were no losses known to cedant

Yes, because the broker confirmed signed line to the reinsurer and provided cover note to the ceding company in good time.

Question 10

Which of the following can defeat contract certainty principles and make a reinsurance contract not certain?

The limits of liability is expressed with the currency code “ $ “

Two of the contract terms are mentioned as “TBA”

Name of the reinsurer is mentioned without the location

Potentially all of the above

Final Recap

• If a reinsurer receives a risk that it determines is not contract certain, it can provide a non-binding indication, which must be clearly marked as such. This indication will not constitute an offer until the risk is contract certain, at which point it will be upgraded to a quote. Conversely, a quote must be clear and unambiguous by the time an offer is made to enter into the contract or the offer is accepted.
• If a contract does not pass Leg 1, it will also not pass Leg 2, as Leg 2 requires the passing of Leg 1 and the completion of documentation.
• For reinsureds based outside Singapore, contract certainty is achieved when the slip is signed by the reinsured. However, if the reinsured is not based in Singapore, the reinsurer should use their best efforts to obtain the reinsured's signature. If, despite their best efforts, they are unable to obtain the signature, the contract can still be deemed contract certain.
• If we sign the slip before the inception date, but there are slight cosmetic changes (e.g., spelling errors) to the slip after the inception date, the contract is deemed contract certain as long as it is legally legible. Please update the slip as soon as practicable.
• The definition of "Documentation completed" is when all required signatures are obtained and the document is deemed contract certain.
• To determine if a reinsured is based in Singapore or outside, refer to their registered address.

Please fill in this form and submit it to us to confirm that you have completed the e-learning module. Upon completion, you will be awarded 2 CPD hours.