Question

What is the liability of the reinsurer under proportional treaty?

a.

The reinsurer’s liability commences simultaneously with that of the ceding insurer.

b.

The reinsurer decides what part of the original insurance he wishes to retain for his own account and reinsures the balance with a reinsurer.

c.

The ceding insurer is bound to part with a fixed percentage of every risk written by it.

d.

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

Posted under IC85 Reinsurance Management

Answer: (a).The reinsurer’s liability commences simultaneously with that of the ceding insurer. Explanation:Under proportional treaty, the reinsurer’s liability commences simultaneously with that of the ceding insurer. The moment the ceding insurer accepts a risk which falls within the scope of the treaty, the reinsurer is bound for his proportion. This means that the reinsurer shares the liabilities of the insurer along with the sum assured, premiums and claims in the same proportion as per the agreement in the treaty.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. What is the liability of the reinsurer under proportional treaty?
Add Comment

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is the quota share treaty?

View solution

Q. What is bordereaux?

View solution

Q. What is surplus reinsurance?

View solution

Q. What is proportional reinsurance?

View solution

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

View solution

Q. When arranging a surplus treaty agreement in conjunction with a quota share treaty, why is it important to determine whether the surplus treaty is based on net or gross lines?

View solution

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

View solution

Q. What is the difference between net and gross lines in surplus treaty agreements?

View solution

Q. Can quota share and surplus methods be used together in a reinsurance treaty?

View solution

Q. What is a surplus treaty?

View solution

Q. What is a quota share treaty?

View solution

Q. What is the purpose of a limit in a reinsurance treaty?

View solution

Q. _________________ is a general practice under surplus treaties where the ceding insurer provides the reinsurers with a list detailing the risks ceded to the treaty.

View solution

Q. Are the facilities of portfolio entry premium and portfolio withdrawal premium applicable to marine and aviation reinsurance business?

View solution

Q. What is the portfolio withdrawal premium?

View solution

Q. If a loss occurs before the cession is made, what is the reinsurer's liability?

View solution

Q. What is the liability of the reinsurer under a proportional treaty?

View solution

Q. What happens to policies issued or renewed during a treaty period when the treaty is terminated?

View solution

Q. What is the alternative method for covering corresponding policies in force on the date when a new treaty agreement commences?

View solution

Q. What policies are covered under a proportional treaty?

View solution
View All MCQs on IC85 Reinsurance Management

Recommended Subjects

Are you eager to expand your knowledge beyond IC85 Reinsurance Management? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!

Microbiology

Uncover the fascinating world of microbes with our Microbiology category. Delve into...

Financial Management and Financial Markets

Master the world of finance with our Financial Management and Financial Markets...

Non Verbal Reasoning

Enhance your cognitive abilities with our Non-Verbal Reasoning category. Dive into...

Highway Engineering

Navigate the road to efficient transportation with our Highway Engineering category....

Mass Transfer

Delve into the science of Mass Transfer with our specialized category. Explore...

Cost Accounting

Dive into the realm of Cost Accounting with our specialized category. Explore cost...

IC22 Life Insurance Underwriting

Prepare for success in the Insurance Institute of India (III) examination with IC22...

Waste Water Engineering

Navigate the challenges of wastewater treatment and management with our Waste Water...

Drug and Pharmaceutical Biotechnology

Navigate the world of pharmaceuticals and biotechnology with our dedicated category....