Question

What options does a ceding insurer have when the sums insured on policies exceed the limits of a surplus treaty?

a.

Bear the balance for its own account.

b.

Facultatively affect each risk individually.

c.

Affect further reinsurance through a second surplus treaty.

d.

All of the above.

Posted under IC85 Reinsurance Management

Answer: (d).All of the above. Explanation:When the sums insured on policies exceed the limits of a surplus treaty, a ceding insurer has the option of bearing the balance for its own account, facultatively affecting each risk individually, or affecting further reinsurance through a second surplus treaty, which is an automatic reinsurance agreement.

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Q. What options does a ceding insurer have when the sums insured on policies exceed the limits of a surplus treaty?
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