What are the two parts of Part 7?

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Multiple Choice

What are the two parts of Part 7?

Part 7 is split into two components: Part A covers direct primary contracts with policyholders (the business written directly by the insurer), and Part B covers reinsurance contracts that the insurer assumes from others (business taken on from cedants). This split matters because direct contracts generate the insurer’s own premiums and bear the initial loss experience, while reinsurance contracts transfer part of that risk to reinsurers and affect net premiums, reserves, and the insurer’s exposure differently. The other options suggest parts or concepts that aren’t the intended two components of Part 7, such as referencing other Part letters or deductible terms, which aren’t how Part 7 is organized.

Part 7 is split into two components: Part A covers direct primary contracts with policyholders (the business written directly by the insurer), and Part B covers reinsurance contracts that the insurer assumes from others (business taken on from cedants). This split matters because direct contracts generate the insurer’s own premiums and bear the initial loss experience, while reinsurance contracts transfer part of that risk to reinsurers and affect net premiums, reserves, and the insurer’s exposure differently. The other options suggest parts or concepts that aren’t the intended two components of Part 7, such as referencing other Part letters or deductible terms, which aren’t how Part 7 is organized.

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