Insurance Awareness - Reinsurance
Which of the following is a characteristic feature of a proportional treaty reinsurance?
Which of the following is a characteristic feature of a proportional treaty reinsurance?
easy Q2 of 15
Step-by-Step Solution
Step 1: Recall proportional treaty features
Proportional treaty reinsurance involves sharing both premiums and losses between insurer and reinsurer in agreed proportions.Step 2: Evaluate options
Reinsurer covers losses exceeding a retention limit describes non-proportional treaty (excess of loss). Reinsurance arranged on a case-by-case basis is facultative reinsurance. Reinsurer only indemnifies catastrophic losses is a type of non-proportional reinsurance.Final Answer:
Sharing of premiums and losses in agreed proportions → Option AQuick Check:
Proportional treaties include quota share and surplus, involving proportional sharing of premiums and losses.
Quick Trick: Proportional = Share premiums and losses.
Common Mistakes:
MISTAKES- Mistaking excess of loss as proportional reinsurance.
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