Question

Which of the following describes proportional reinsurance?

a.

The reinsurer assumes all the liabilities of the insurer

b.

The reinsurer shares liabilities of the insurer along with sum insured, premiums, and claims in the same proportion as per agreement in the treaty

c.

The reinsurer accepts only a specific risk of a specific insured

d.

The reinsurer automatically accepts a certain liability for all risks falling within the scope of the agreement

Answer: (b).The reinsurer shares liabilities of the insurer along with sum insured, premiums, and claims in the same proportion as per agreement in the treaty Explanation:Proportional reinsurance involves sharing the liabilities of the insurer with the reinsurer in the same proportion as per the agreement in the treaty.

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Q. Which of the following describes proportional reinsurance?

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