Casualty Actuarial Society (CAS) Practice Exam

When evaluating a reinsurer, which factor is least likely to be considered by a primary insurer?

1. Claim-paying ability

2. Reputation

3. Marketing strategies

4. Management

The correct answer is: Marketing strategies

When a primary insurer evaluates a reinsurer, several factors come into play, all of which can significantly impact the effectiveness and reliability of reinsurance agreements. Among these factors, the marketing strategies of a reinsurer are the least likely to be a primary concern. The core aspects that are typically prioritized in the evaluation process include claim-paying ability, which provides assurance that the reinsurer can meet its obligations when claims arise. A reinsurer's reputation is also critical, as it reflects the trustworthiness and reliability in the industry, influencing the likelihood of successful collaboration. The management of the reinsurer is equally important, as sound leadership can affect strategic decisions, financial health, and overall operational efficiency. In contrast, marketing strategies focus more on how a reinsurer presents itself to potential clients and how it constructs its market presence. While marketing may contribute to awareness and customer acquisition, it does not directly impact the reinsurer's financial stability or operational success as much as the other factors mentioned. Thus, while all aspects of a reinsurer contribute to its overall value, marketing strategies do not typically weigh as heavily in the assessment criteria for a primary insurer when selecting a reinsurer.