Page 183 - Fire Insurance Ebook IC 57

The Insurance Times

to demand immediate payment from the
reinsurers. Such agreed amount is known as
'cash loss limit.'

(vii) The ceding insurer retains an agreed percentage
of the annual premium as a premium reserve which
is subsequently adjusted in accounts.

(viii) Accounts are rendered on fixed time intervals, i.e,
quarterly or half yearly basis.

(ix) Either party can terminate the treaty by giving
prescribed notice.

(x) Disputes can be settled through arbitration.

Q7. Outline the differences between surplus
treaty and facultative methods of
reinsurance.

Ans. There are several differences between surplus treaty
and facultative methods of reinsurance. They are as
follows :
(i) The obligatory method of the treaty method is really
advantageous in terms of reinsurance
acceptances. The reinsurer cannot decline to

Website: www.bimabazaar.com Call: 033-22184184 / 40078428 196

Copyright@ The Insurance Times. 09883398055 / 09883380339