Insurance Awareness - Reinsurance
Which of the following statements about non-proportional reinsurance is CORRECT?
Which of the following statements about non-proportional reinsurance is CORRECT?
hard Q10 of 15
Step-by-Step Solution
Step 1: Understand non-proportional reinsurance
Non-proportional reinsurance indemnifies the insurer only when losses exceed a pre-agreed retention or threshold.Step 2: Evaluate options
The reinsurer shares premiums and losses in a fixed percentage describes proportional reinsurance; It is also called quota share reinsurance is quota share (proportional); It involves automatic acceptance of all risks in a portfolio describes treaty reinsurance.Final Answer:
The reinsurer indemnifies the insurer only when losses exceed a specified retention limit → Option BQuick Check:
Non-proportional reinsurance is also known as excess of loss reinsurance.
Quick Trick: Non-Proportional = Excess of Loss coverage.
Common Mistakes:
MISTAKES- Confusing non-proportional with proportional reinsurance.
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