Under a ceded reinsurance contract, which condition triggers discussion in the interrogatories?

Prepare for the CAS Exam 6 with detailed study materials. Use flashcards and multiple-choice questions, each with hints and explanations, to get exam-ready!

Interrogatories focus on parts of a ceded reinsurance arrangement that could materially affect risk transfer and financial reporting. When the ceded premium is 50% or more of gross premium, a large portion of the ceded business is under reinsurance, so detailed questions are needed about treaty terms, retention levels, coverage, and how the ceded business is recognized in the accounts. If at least 25% of the ceded premium is retroceded back to the insurer, the risk transfer becomes even more complex, raising questions about who ultimately bears the risk and how losses and reserves are allocated, which justifies targeted information gathering. The other scenarios—very small ceded premium, related-party cessions, or short-duration deals—are less likely to require interrogatories unless accompanied by additional red flags. Thus, the condition that triggers discussion is when the ceded premium is a large share of gross premium, or a substantial portion of ceded premium is retroceded back to the insurer.