Question

What is a "line" in a surplus treaty?

a.

The amount of premium paid by the ceding insurer

b.

The number of risks covered by the treaty

c.

The amount ceded to the surplus treaty equal to the ceding insurer's retention

d.

The amount ceded to the surplus treaty in excess of the ceding insurer's retention

Posted under IC85 Reinsurance Management

Answer: (c).The amount ceded to the surplus treaty equal to the ceding insurer's retention Explanation:In a surplus treaty, a "line" is equal to the ceding insurer's retention. For example, if a ceding insurer has a ten line surplus treaty on the basis of a maximum retention of Rs. 5,00,000, the capacity of the treaty to absorb liability over and above the retention would be Rs. 50,00,000 (10 x Rs. 5,00,000), and the ceding insurer would have automatic protection for policies having sums insured up to Rs. 55,00,000.

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Q. What is a "line" in a surplus treaty?
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