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4

Features and operation of

proportional reinsurance treaties

Contents Syllabus learning Chapter
outcomes

Learning objectives 4
Introduction
Key terms
A Main features and operation of proportional reinsurance treaties 4.1
B Main accounting methods 4.2

C Commissions and deductions 4.3
D Premiums and claims reserves 4.4
E Calculation of reinsurance premiums and claims recoveries 4.5
F Cession and event limits 4.6 Reference copy for CII Face to Face Training
Key points
Question answers
Self-test questions
Appendix 4.1: Fixed percentage
Appendix 4.2: Eighths basis

Appendix 4.3: Twenty-fourths basis

Learning objectives

After studying this chapter, you should be able to:
• explain the operation of the main types of proportional treaties;
• discuss alternative bases of cover;
• calculate earned and unearned premiums and claims recoveries;
• explain the main methods of accounting;
• describe the various types of commission arrangements including loss participation clauses;
• distinguish between premium and claims reserves; and
• explain the use of cession and event limits.