Page 109 - Reinsurance Management IC85

The Insurance Times

i) Pro rata treaty
ii) Excess loss treaties
iii) Aggregate excess loss treaties

Ans: i) For pro rata treaty, which is a proportional treaty,
the primary insurer sends monthly bordereaux to the
reinsurer, detailing the premiums due to the reinsurer
and claims due from the reinsurer.

The primary insurer will remit the difference to
the reinsurer when the premiums exceed the
losses and if the losses exceed the premiums, the
reinsurer remits the difference to the primary
insurer.

If at any time, there are some exceptionally large
losses, then it is the convention for the reinsurer
to remit the losses to the primary insurer
before the end of the reporting period. The
liability of reinsurer is based on pre-
determined percentage.

ii) In the case of excess loss treaties (a non-

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