Page 24 - Reinsurance Management IC85
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Reinsurance Management
reinsurer will get 90% of the ceding company's
fire premium and pay 90% of claims thereon.
Q. Discuss the advantages of Quota Share treaty.
A. The advantages of Quota Share Treaty are
a. Useful for a new company since the reinsurer
participates in the underwriting of each and
every policy.
b. It simplifies administration and reduces costs
where there are relatively uniform sums
insured and high volumes of business.
c. Where loss ratios abruptly vary from year to
year as in livestock, hail, etc., the quota share
treaty will benefit the reinsured.
d. It will help correct underwriting considerations
where loss ratios have gone out of control,
e. It is useful where there are statutory cessions
to State Reinsurance Funds,
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