Question

    What is a quota share treaty?

    A A proportional reinsurance treaty where the insurer cedes a fixed percentage of every risk. Correct Answer Incorrect Answer
    B A type of non-proportional reinsurance Correct Answer Incorrect Answer
    C A reinsurance treaty that covers losses in excess of a certain amount Correct Answer Incorrect Answer
    D A reinsurance treaty that covers the insurer's total losses in a given year. Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    In a quota share treaty, the insurer cedes a fixed percentage of every risk to the reinsurer. Both the premium and the losses are shared proportionally between the insurer and the reinsurer.

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