Question

_____________ is an automatic reinsurance agreement whereby the ceding insurer is bound to part with a fixed percentage of every risk written by it.

a.

Proportional treaty

b.

Proportional facultative

c.

Surplus treaty

d.

Quota share treaty

Answer: (d).Quota share treaty Explanation:In a Quota Share Treaty, the reinsurer agrees to accept a fixed percentage of the ceding insurer's entire portfolio of risks, usually on a pro rata basis. The ceding insurer is obligated to cede that percentage of every risk that it writes, and the reinsurer is obligated to accept it. For example, if the quota share is 50%, then the ceding insurer will cede 50% of every risk it writes to the reinsurer.

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Q. _____________ is an automatic reinsurance agreement whereby the ceding insurer is bound to part with a fixed percentage of every risk written by it.

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