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Which of the following best defines treaty reinsurance?

easy Q11 of 15
Insurance Awareness - Reinsurance
Which of the following best defines treaty reinsurance?
AReinsurance of individual risks approved separately by the reinsurer
BAutomatic acceptance of all risks within a defined portfolio under a standing contract
CReinsurance that covers only catastrophic losses
DReinsurance arranged only for life insurance policies
Step-by-Step Solution

  1. Step 1: Identify the concept

    Treaty reinsurance is a pre-negotiated contract where the reinsurer automatically accepts all risks within a specified portfolio without individual approval.

  2. Final Answer:

    Automatic acceptance of all risks within a defined portfolio under a standing contract → Option B

  3. Quick Check:

    Automatic acceptance of all = correct choice ✅
Quick Trick: Treaty = Total Portfolio, Automatic acceptance.
Common Mistakes:
MISTAKES
  • Confusing treaty with facultative reinsurance which requires individual risk approval.
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