Question

In a combined quota share and surplus treaty, what is the purpose of the ceding insurer's retention under the quota share treaty?

a.

To ensure the reinsurer accepts only superior risks.

b.

To provide a maximum acceptance limit for the reinsurer.

c.

To establish the "line" on which the surplus treaty is based.

d.

To protect the ceding insurer from losses.

Posted under IC85 Reinsurance Management

Answer: (c).To establish the "line" on which the surplus treaty is based. Explanation:In a combined quota share and surplus treaty, the ceding insurer's retention under the quota share treaty becomes the "line" on which the surplus treaty is based. The ceding insurer cannot keep two retentions, one for each treaty.

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Q. In a combined quota share and surplus treaty, what is the purpose of the ceding insurer's retention under the quota share treaty?
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