Page 122 - Reinsurance Management IC85
P. 122
The Insurance Times
intricate administrative procedures and
complexities.
Q. Distinguish between Pro-rata and excess of
loss reinsurance.
Ans:
Prorata Excess of loss
1. Premiums and losses 1. Settlement of
are settled by account premiums by the
and account or settlement of
bordereaux losses individually.
2. It is a proportional 2. It is a non-proportional
treaty treaty
3. There is sharing of 3. Risks that are above
risks retention are not shared
4. This treaty focuses on 4. This treaty focuses on
the size of the loss the size of the risk
5. Rate is calculated as 5. There is a separate
the percent of the rate, with commission
original premium ceding commission
less the ceding
commission.
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