GENERAL KNOWLEDGE

Detailed explanation-1: -Definition: The maximum amount of risk retained by an insurer per life is called retention. Beyond that, the insurer cedes the excess risk to a reinsurer. The point beyond which the insurer cedes the risk to the reinsurer is called retention limit.

Detailed explanation-2: -Issue: Reinsurance, often referred to as “insurance for insurance companies, ‘’ is a contract between a reinsurer and an insurer. In this contract, the insurance company-the cedent-transfers risk to the reinsurance company, and the latter assumes all or part of one or more insurance policies issued by the cedent.

Detailed explanation-3: -The amount of insurance retained by the ceding company for its own account is called the retention limit, or net retention.