Page 143 - Reinsurance Management IC85

Reinsurance Management

Q8. a) Elaborate the proportional methods of
reinsurance with examples.

b) How is the use of information
technology simplifying reinsurance
administrative procedures?

Ans: a) Two main forms of proportional treaty reinsurance
are :
i) Quota share treaty
ii) Surplus treaty

i) Quota share treaty: This treaty is an automatic
reinsurance whereby the ceding insurer is bound
to part with a fixed percentage of every risk
written by it. The same percentage is applied to
every risk to determine cession in the class of
insurance as reinsured - no matter how large or
small the sum insured and irrespective of whether
the risk is ‘good’ or ’bad’.

Eg: 60% quota share treaty on all risk reinsured
in household FIRE portfolio.

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