Insurance Awareness - Reinsurance
Which of the following statements about treaty reinsurance is correct?
Which of the following statements about treaty reinsurance is correct?
medium Q6 of 15
Step-by-Step Solution
Step 1: Understand treaty reinsurance
Treaty reinsurance is an agreement where the reinsurer automatically accepts all risks of a specified class from the insurer.Step 2: Evaluate options
It requires separate negotiation for each risk describes facultative reinsurance, "It is only applicable to life insurance policies" is incorrect as treaty applies to general and life insurance, and D is false.Final Answer:
It involves reinsurer accepting all risks of a particular class automatically → Option AQuick Check:
Treaty reinsurance is automatic and covers a portfolio, unlike facultative.
Quick Trick: Treaty = automatic acceptance of risk portfolio.
Common Mistakes:
MISTAKES- Confusing treaty with facultative reinsurance or government schemes.
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