Question

    In this reinsurance arrangement, an agreement is made

    between the ceding company and the reinsurer(s), specifying limits for reinsurances that can pertain to monetary values, geographical regions, or sections of business. Within this contract, the reinsurer is obligated to accept all risks falling within the scope of the agreement, and the ceding company is required to cede risks as per the agreement's terms. What type of reinsurance is being described?
    A Excess of Loss Reinsurance Correct Answer Incorrect Answer
    B Facultative Reinsurance Correct Answer Incorrect Answer
    C Proportional Reinsurance Correct Answer Incorrect Answer
    D Treaty Insurance Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Treaty Insurance: Under this type of reinsurance a Treaty agreement is entered into between the ceding company and the re-insurer(s) whereby the reinsurances are within the limits of the Treaty. These limits can be monetary, geographical, section of business, etc. Under this contract it is obligatory for the re-insurer to accept all risks within the scope of this Treaty and it is obligatory for the ceding company to cede risks in accordance with the terms of the Treaty.

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